Buying a Home near Salt Lake City, Utah? CLICK HERE! - Exclusive Buyers Agent Blog

Conflicts of Interest When Working with a Traditional Real Estate Brokerage

Wed, 18 Nov 2009 18:59:56 -0600

Here is a nice clip from CNN that covers the many conflicts of interest that can exist if you don't make sure the agent you hire will work only for you.

The New Good Faith Estimate (GFE) Form, Page 2 Section B

Thu, 12 Nov 2009 01:34:26 -0600

Section B of Page 2 of the Good Faith Estimate (GFE) has 9 parts. Let's go through them.

Item 3 will be a list of required services that the lender will select. These are services necessary in order to complete your transaction. These charges are subject to a 10% tolerance at settlement, meaning that they may be up to 10% higher (but ONLY 10% higher) at settlement.

It is my understanding that the TOTAL of all items listed in these categories is subject to a 10% difference at closing. In other words, an individual item may in fact cost more than 10% more at settlement, but if another item or items from that section cost less than they were quoted, and the total costs for all items in that section still fit within the 10% tolerance, it can be allowed.

The good news is that lenders who want to be the most competitive may begin to shop around themselves for lower cost providers for these services, in order to keep the total costs they quote down as low as possible, making them look like a better option in a comparison.

Item 4, Title Service and Lender's Title Insurance is a total of ALL title charges except Government Recording charges (which are listed in Item 7). This item is also subject to a 10% cap at settlement, but only if the lender selects the title company or if you select a title company identified by the lender. If you choose your own title company, (not a company identified by the lender) there is no cap on the amount you may be charged at settlement. (Of course, you are most likely to select a company that will cost you less at settlment, but should you choose a more expensive company, the lender cannot be held to the estimate they quote you for using a lender identified company.)

Item 5 is the cost of Owner's Title Insurance. In some states (including Utah) this is most often paid for by the Seller. Even in such an instance, this fee will be listed on the Good Faith Estimate (GFE). Just remember that if this is true in your transaction, you may be able to deduct this amount from your total loan costs for the purposes of determining the cash you need to close the loan.

This item can also increase up to 10%, but once again, only if you (or the Seller) use a lender identified company. Otherwise there is no cap.

Item 6 are the required services that you can shop for. These are services that may be necessary for your transaction. These may include such things as:

Pest Inspection
Home Warranty
Survey
etc.

These are just examples and are only subject to a 10% tolerance if you use lender identified companies.

Item 7 are the total of Government Recording Charges. These may also increase up to 10% at Settlement.

Item 8 are Transfer Taxes. Fortunately, in Utah, we don't have these. There are some states that do. If your transaction requires payment of a Transfer Tax, there is ZERO Tolerance on this item. It must be the figure you will be charged at settlement.

Item 9 explains the initial costs of setting up your escrow account. (These are your deposits into the account to cover property tax and insurance disbursements.) These are not subject to a cap, as the account will simply need to have enough money in it to pay such disbursements when the time comes. Still, most lenders should be able to get this figure pretty close to what it will be by estimating which month of the year you are likely to close in and the lender's own requirements for escrow account reserves.

Item 10 is the daily interest charge for your loan. Although the TOTAL amount listed here is not subject to any tolerance cap (because it will depend on which day of the month you close whether there are 0 or 30 days of interest charged) the daily amount of interest you will be charged cannot change (as it is a factor of your interest rate).

Item 11 is the cost of Homeowner's Insurance. A borrower usually pays a full year of premium up-front. This item is not subject to a 10% cap, as the borrower is able to select their own insurance and coverage level. (Coverage level must be adequate to protect the collateral for the loan, and usually is subject to approval by the lender.)

Page 3 of the new Good Faith Estimate (GFE) form contains Instructions, an optional Trade-Off table, and a Shopping Chart, as well as a disclosure that your loan may be sold after settlement. We'll cover page 3 next week.

The New Good Faith Estimate (GFE) Form, Page 2 Section A

Thu, 12 Nov 2009 01:24:07 -0600

Page 2 of the new Good Faith Estimate (GFE) will look significantly different from Good Faith Estimates of the past.

Section A has 2 parts.

Item 1 is the origination charge, or what the lender is charging you for the loan. This number includes ALL lender fees, combined into one figure. These fees include all the items one used to see listed on Good Fath Estimates as separate line items under such names as:

Application Fee
Origination Fee
Processing Fee
Underwriting Fee
Document Preparation Fee
Administration Fee
Wire Transfer Fee
etc.

It may also will include any Yield Spread Premium (YSP), or money that a broker may collect as profit on the back end of your loan transaction. (If there is a Yield Spread Premium and it is not disclosed in Item 1, it will be disclosed in Item 2.)

These will ALL now be shown as one single fee, "Our Origination Charge", or basically, all monies paid to the lender and/or broker in order to obtain the loan.

Item 2 discloses your credit or charge for the specific interest rate quoted. What this table shows is that you, as a borrower, may have had an option to select either a higher or a lower interest rate from the lender's rate sheet.

If you were eligible for a lower rate than you have been quoted, or if there was a credit for the rate selected, that credit will be disclosed here in the second box.

If it will cost money in order to obtain the rate quoted (formerly known as "points") that charge will be shown here in the third box.

If the lender may also choose to select the first box disclosing only that the credit or charge for the interest rate they are quoting you has already been included in (either added to or subtracted from) the origination charge quoted above in item 1. If this box is checked, you may not know the exact amount of the credit or charge, but it shouldn't matter too much as it will all be included in the Total Adjusted Origination Charges in Section A, the total up-front costs to obtain that loan. If this box is checked, however, you may want to ask the lender if you would have qualified for a better rate.

Section A is pretty straightforward. Now on to Section B.

The New Good Faith Estimate (GFE) Form, Page 1 (Part 2)

Thu, 12 Nov 2009 01:07:11 -0600

The bottom half of page 1 of the Good Faith Estimate (GFE) form begins with a Summary of your Loan Section. This is where a lot of disclosures regarding the loan will be made.

What is the initial loan amount?
What is the initial interest rate?
What will your initial monthly payment be? (Principal and Interest, and any mortgage insurance if applicable. Taxes and homeowner's insurance are not included here, but may be required to be paid as part of your monthly payment.)
Can your interest rate rise? If so, how much?
Can your loan balance rise? If so, how much?
Can your monthly payment rise? (Principal and Interest, and any mortgage insurance. Taxes and homeowner's insurance excluded.) If so, how high could it go?
Does your loan have a pre-payment penalty? If so, how high could that be?
Does the loan have a balloon payment? If so, how much and when is it due?

Some lenders require an escrow account. This section will disclose if an escrow account is required or not and reiterate your base monthly payment amount. Remember that if an escrow account is not required, you will be responsible to keep current all taxes, insurance and other property related charges. Even when one is not required, some borrowers choose to have one set up anyway.

In the event that an escrow account is not required, some lenders may offer an incentive to establish an escrow account anyway. Others may actually assess a penalty or fee in the event you choose not to establish an escrow account, even if not required by the terms of the loan. This penalty will appear as part of the total origination charge and/or will be reflected in the interest rate you are quoted and is said to help cover the costs of monitoring that the taxes and insurance on the property are being kept current by the borrower.

Finally, at the bottom you will see a summary of all Estimated Settlement Charges. These are broken down into 2 sections: Adjusted Origination Charges (All LOAN Costs) and Charges for All Other Settlement Services (All other Costs to close). Both are broken down on the next page of the Good Faith Estimate (GFE) which we'll examine next.

Page 2 of the new Good Faith Estimate (GFE) is where you will see obvious changes from Good Faith Estimates of the past.

The New Good Faith Estimate (GFE) Form, Page 1 (Part 1)

Thu, 12 Nov 2009 01:00:55 -0600

Let's examine the top half of Page 1 of the new Good Faith Estimate (GFE) form.

One of the first changes you will notice about the Good Faith Estimate form is that it now asks for the Loan Originator's email address.

It also asks for a Property Address. Remember, without a property address (the one the borrower intends to get the loan for), the Good Faith Estimate is non-binding, meaning the lender (or loan originator) is not able to be held to fees and rates quoted. However, prior to closing, a Good Faith Estimate will all the required information on it must be completed. This must occur at least 3 banking days prior to settlement.

The next section of Page 1 of the Good Faith Estimate form explains the purpose of the GFE and explains that a borrower can shop for the best loan. It also mentions that the GFE contains a "shopping chart" on page 3 of the form, which we will cover when we get there.

Next is a section explaining 4 important dates relating to the Good Faith Estimate and the loan.

The interest rate quoted on the Good Faith Estimate (GFE) has an expiration date. Pay attention to this date. If you have not locked your interest rate it will likely usually only be for the day the Good Faith Estimate is issued. It's possible that some lenders may even put an hour of day when the rate quoted expires.

In this event, note that in addition to the interest rate being able to change, some of the other fees may change until you lock your interest rate. Once you lock your interest rate, if anything has changed, the lender will provide you with yet another Good Faith Estimate (GFE) outlining the rate, fees, payment and other specific loan terms. Make sure that item 1 on the new Good Faith Estimate (GFE) now shows the date on which your rate lock will expire.
There is also an expiration date for the estimate of all other settlement charges quoted by the lender. Once again, make sure once you have locked your interest rate that this date will not arrive before your settlement date does.
Item 3 explains the length of your interest rate lock. The reason this is important, even if you have not yet locked your interest rate is because the shorter the rate lock period, the lower interest rate is available to the lender (and to you). Keep this in mind as you compare offerings from lenders and as you evaluate your needs. It may not be the best idea to choose a lender based on their slightly lower interest rate quoted, if you will need a rate lock for 60 days and they have only quoted a 30 day lock period.
You will need to lock your interest rate before the closing date. This is so the lender can finalize your loan package and prepare the documents necessary for your closing. Each lender will specify the minimum number of days they will need to carry out the rest of the process once you have locked your loan.

Continue on for an explanation of the rest of the new Good Faith Estimate (GFE) form.

Shopping for a Loan - Understanding the New Good Faith Estimate (GFE) Form

Thu, 12 Nov 2009 00:46:37 -0600

Due to RESPA Reform, as of January 1, 2010, lenders are required to use a new, uniform, Good Faith Estimate (GFE) form. This new form creates additional disclosure and transparency about the loan product being offered as well as the costs to the borrower. The Good Faith Estimate (GFE) form is 3 pages in length. All lenders will use the same form. This was not true prior to January 1, 2010.

Once a borrower has provided all the information necessary for a lender or broker to complete a Good Faith Estimate (GFE), the loan originator has 3 business days to deliver a Good Faith Estimate to the borrower. It can be delivered via email if the borrower consents.

Consumers will be able to use the new Good Faith Estimate (GFE) form to more easily compare loan proposals from various lenders.

The new Good Faith Estimate (GFE) form is now more binding on the lender. When I say "more binding," I mean that it IS binding with a few exceptions:

Some fees quoted are 100% binding on the lender if certain conditions are met.
Some fees quoted are subject to "tolerance levels" (can change up to 10% if certain conditions are met)
Some fees are not subject to any cap in the amount they can differ from what is quoted on the Good Faith Estimate (GFE) form.

We will go over, in detail, which fees fall into which category as we go through the Good Faith Estimate (GFE) form. The fees which are not subject to any tolerance cap are usually those where the borrower chooses to use a service not required to close the transaction, or uses a company, for a required service, other than a company identified by the lender (from which they derived their estimated cost). If the borrower selects one of the companies identified by the lender, or if the lender selects the company for a required service, the lender is bound to the figures quoted with up to a 10% tolerance.

There are 6 pieces of information that have to be on the Good Faith Estimate (GFE) in order for it to be binding on the lender or mortgage broker. They are:

Borrower's Name
Social Security Number
Gross Monthly Income
Property Address
Estimated Property Value
Loan Amount

If any of these pieces of information change during the transaction, the Good Faith Estimate (GFE) is no longer binding and the Lender or Broker will then issue a new Good Faith Estimate within 3 Business days. Anytime a new Good Faith Estimate is prepared, the borrower cannot close on that transaction for another 3 business days after receipt of the new Good Faith Estimate (GFE) form.

The sections, and therefore the numbers quoted, on the new Good Faith Estimate (GFE) form now correspond to identically numbered sections on the Settlement Statement (HUD1 or HUD1A) that the borrower sees at closing.

Let's examine these forms, beginning with the Good Faith Estimate (GFE) form, page 1:

Mortgage Shopping Will Soon be a Lot Less Complicated

Tue, 10 Nov 2009 19:11:49 -0600

Mortgage shopping will soon be a lot less complicated.

RESPA Reform takes effect on January 1, 2010. While still not perfect, the changes do simplify the ability to compare loan offerings between lenders. The goal was to simplify and improve disclosure requirements for mortgage settlement costs under RESPA. My analysis: Mission Accomplished

Here are some key highlights for borrowers:

The new Good Faith Estimate (GFE) and the New Settlement Statement (HUD1 or HUD1A) now correspond to one another. In the past, there was no direct correllation between line items, making it difficult for a consumer to know whether or not undisclosed junk fees were being charged at closing.
Instead of breaking loan costs down into multiple line items, now, all costs being charged by the lender will be compiled into one total fee.
Additional information about the loan (Is there a pre-payment penalty? Can this loan Adjust? etc.) is required to be disclosed on the Good Faith Estimate, creating more transparency about the loan.
Lenders will be required to deliver on the Good Faith Estimate as quoted (NOTE: some items have allowable tolerances for change).

Here are some more changes and an overview of the new forms.

You will be better able to understand an compare loan proposals from different lenders if you have an agent who understands the process. Your best bet is to hire an Exclusive Buyers Agent who will work only on your side of the transaction. Overall the reforms will make it easier for the average borrower to comparison shop for a mortgage loan.

As advocates for the Home BUYER, one of the services we offer our clients is to help them evaluate lenders and loan options using our TOTAL Cost of the Loan^SM system.

If you have excellent credit and will be buying a $300,000-$800,000 home within 90 days and would like an agent who will work exclusively for you, make sure you get an Agent on YOUR side of the transaction! Make sure you hire an E B A!

Call us at (801) 969-8989 or contact us via the link on this page.

Exclusive Buyers Agents do not list homes and never represent Sellers. They represent Buyers ONLY on the Buyer's side of the transaction. They work to get BUYERS the Best Price and Terms when they Buy...

Finally...

I'm Waving!

Fri, 30 Oct 2009 14:02:56 -0500

Thanks to my good friend Rolando Gill, I'm waving!

I'm looking to collaborate with NAEBA members and other EBAs and some of my favorite Blogging friends, as well as personal friends and past clients.

If you want to wave with me, send me a private message with your gmail address in it. If I add you to my wave, you'll get my address as well. This way we don't have to publicly post our email addresses.

Thanks!

Looking forward to waving with you!

If you want to see some cool ways to "wave", check out this video. (Less than 10 minutes... not the 80 minute one!)

Benjamin Clark is Broker/Owner of Homebuyer Representation, Inc. "The Real Estate Agents on the Buyer's Side"^TM

Public Posts are written for the brokerage's target market.

Member's Only Posts are written for members of the ActiveRain Community and tend to focus on topics related to Blogging, Marketing, Technology and Photography.

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and flag as "Featured" so others can find it too!

How to "Shop" Loans and Lenders Part 1 of 7 (How to Shop Mortgage Loan Series)

Sat, 01 Aug 2009 15:48:25 -0500

Many Buyers pay 1-3% too much for their loan in up-front costs, even after "shopping" for lenders. Some choose a lender solely based on which one has the lowest up-front costs, but they end up paying for it by getting an interest rate that is higher than they qualify for. Others unnecessarily pay too much in fees in order to get the lowest interest rate.

Shopping for a loan does not have to be difficult or complicated. The key is to take control of the process, get organized, and make sure you do it right.

Here are some basics on ONE way to shop for a loan. Click each link for more information on each topic:

As advocates for the Home BUYER, one of the ways we protect our clients above and beyond what most traditional agents do is by offering to help them evaluate lenders and loan options using our TOTAL Cost of the Loan^SM system.

Call us at (801) 969-8989 or contact us via the link on this page.

Finally...

How to "Shop" Loans and Lenders Part 2 of 7 (Same Day - Same Time)

Sat, 01 Aug 2009 15:46:34 -0500

Shopping for a loan does not have to be difficult or complicated. The key is to take control of the process, get organized, and make sure you do it right.

Here are some basics on ONE way to shop for a loan. Click each link for more information on each topic:

Shop the lenders on the same day and at the same time

This first rule is not only the fairest way to shop for a loan (for the lenders), but it also keeps you from cheating yourself by using incorrect data to make a decision.

Many Buyers make the mistake of getting a quote from one lender on Friday, another on Monday and another on Tuesday. The reason this gives you inaccurate data is because the market affects the rates. You can't shop for quotes on different days and fairly compare the lenders. You can't even always shop your lenders at different times on the same day.

Pre-Schedule the day and time you want to get their quotes on and then you can make a fair comparison.
Make sure all the lenders have the same facts
Figure out the TOTAL Cost of the Loan^SM
Don't skip the "shopping" even if you have a "friend" in the business or a "company special"
Ask for References!
A few extras

Call us at (801) 969-8989 or contact us via the link on this page.

Finally...

How to "Shop" Loans and Lenders Part 3 of 7 (Same Facts)

Sat, 01 Aug 2009 15:45:00 -0500

Shopping for a loan does not have to be difficult or complicated. The key is to take control of the process, get organized, and make sure you do it right.

Here are some basics on ONE way to shop for a loan. Click each link for more information on each topic:

Shop the lenders on the same day and at the same time
Make sure all the lenders have the same facts in order to make an apples-to-apples comparison
- These facts include:
- Same Purchase Price
- Same Down Payment (And therefore the same Loan Amount)
- Same Loan Type (FHA, VA, Conventional, Other)
- Same Loan Term (30 Year, 15 Year, other)
- Same "Points" (We usually recommend having them all quote you with "No Points")
- Length of the "Lock" (30-45 days is standard. Sometimes you can get a better rate with an even shorter closing date and lock)
- Same Credit Score and Debt Ratio Assumptions
- etc. etc.
What do you really want out of "shopping" your loan? The lowest rate? The lowest fees? Most Buyers fixate on one of these and when a lender figures out which one, they get that part of the loan as low as possible by moving things elsewhere in the equation.

Lenders should know that you are shopping for both the lowest rate AND the lowest fees. Neither is most important to you. The total cost of the loan (fees AND rate) will be considered.

What the Buyer really wants to do is save the most money while they hold the loan. Up front AND over the long haul.
Figure out the TOTAL Cost of the Loan^SM
Don't skip the "shopping" even if you have a "friend" in the business or a "company special"
Ask for References!
A few extras

Call us at (801) 969-8989 or contact us via the link on this page.

Finally...

How to "Shop" Loans and Lenders Part 4 of 7 (TOTAL Cost)

Sat, 01 Aug 2009 15:43:40 -0500

Shopping for a loan does not have to be difficult or complicated. The key is to take control of the process, get organized, and make sure you do it right.

Here are some basics on ONE way to shop for a loan. Click each link for more information on each topic:

Shop the lenders on the same day and at the same time
Make sure all the lenders have the same facts
Figure out the TOTAL Cost of the Loan^SM

After many years of evaluating how lenders compete for business, we have found a good way to calculate the TOTAL cost of a loan. We do this by considering how many dollars leave your pocket at the closing table (mostly made up of fees) and how many dollars leave your pocket each month you hold the loan (mostly a factor of the rate). This is the fairest way I have found to shop lenders, and even to compare different loan types from the same lender.

Homebuyer Representation, Inc. has created a program that extrapolates these figures out for the term of the loan (15 or 30 years). It can show you the total dollars that have left your pocket at any point along the way. You can see on a graph that the best lender in the short term (lowest fees) is not always the best lender in the long run (often the one with the lowest rate.) They often cross paths along the way.

What our system does is it allows you to see where this transition takes place (if it does). Graphing out the TOTAL cost of each loan option gives you the ability to make the best educated decision regarding which loan to choose.

If you know you will only hold the loan for 2-3 years, it may actually cost you less if you choose a lender whose rate is a bit higher, but whose fees are substantially lower than another lender's offering. If you believe you will hold the loan for potentially a longer length of time, a lender who costs a bit more up front, but offers a lower interest rate, may cost you the least amount of money by the time you will be likely to either sell the home or refinance the loan.

The problem with just judging a loan by the APR is that it doesn't allow you to understand which loan is really going to cost you the least amount of money based on your specific scenario. (How long you plan to hold the loan) Still, if you have no other way to compare, comparing the APR is better than just comparing the rate alone or the fees alone, as the APR does factor in the up front costs of the loan.
Don't skip the "shopping" even if you have a "friend" in the business or a "company special"
Ask for References!
A few extras

Call us at (801) 969-8989 or contact us via the link on this page.

Finally...

How to "Shop" Loans and Lenders Part 5 of 7 (Friend/Special Deal)

Sat, 01 Aug 2009 15:39:40 -0500

Shopping for a loan does not have to be difficult or complicated. The key is to take control of the process, get organized, and make sure you do it right.

Here are some basics on ONE way to shop for a loan. Click each link for more information on each topic:

Shop the lenders on the same day and at the same time
Make sure all the lenders have the same facts
Figure out the TOTAL Cost of the Loan^SM
Don't skip the "shopping" even if you have a "friend" in the business or a "company special"

Some clients think they have "shopped" lenders before we meet. They believe they have found the best option and they feel comfortable with the lender for some reason. Other times they don't want to shop for a loan because they have a family friend in the business or they work for a lender and they believe they will get a good deal by working through the person or company they have a relationship with. Often, when we help them shop correctly, we will find an even better option with lower fees AND a lower rate, or the "special deal" they were being offered, miraculously gets better. We have, many times, saved clients thousands of additional dollars when we teach them how to correctly "shop" their loan again.

I encourage clients to compare their options... especially if they have been offered a special deal from a friend or their employer. Many borrowers take these loans at face value, never realizing that they could have saved thousands of dollars, just by doing some shopping around. After all, if the borrower really is getting a good deal, comparison shopping will only confirm that.

A good policy has always been: Trust. But verify.
Ask for References!
A few extras

Call us at (801) 969-8989 or contact us via the link on this page.

Finally...

How to "Shop" Loans and Lenders Part 6 of 7 (References)

Sat, 01 Aug 2009 15:38:11 -0500

Shopping for a loan does not have to be difficult or complicated. The key is to take control of the process, get organized, and make sure you do it right.

Here are some basics on ONE way to shop for a loan. Click each link for more information on each topic:

Shop the lenders on the same day and at the same time
Make sure all the lenders have the same facts
Figure out the TOTAL Cost of the Loan^SM
Don't skip the "shopping" even if you have a "friend" in the business or a "company special"
Ask for References!

I can't believe how few people (almost NONE) ask lenders for references. Communicating with recent customers allows you to ask questions about the process and get candid answers from someone who just worked with that lender. This allows you to choose a lender who will:
1. Close the loan on time
2. At the terms they promised.
Probably one of the biggest legitimate fears a borrower has is the bait-and-switch. The lender tells the borrower just days before closing that something was uncovered in their credit that means they can't give them the rate they promised, or it will cost them additional fees to get it (or both). The Buyer feels extreme pressure to take that higher rate and/or pay the higher fees, or potentially lose the home.

Make sure you choose a lender who will work diligently to process your file as completely as possible, as early as possible. I enjoy working with lenders who have full document packages to the title company 2-5 days before Settlement. Closing could be the smoothest part of your transaction, or the most terrible part of it, in large part based on which lender you choose and their attitude, work ethic and thoroughness in putting together your complete loan package as early in the process as possible.

A lender who does as much work as possible as early as possible is less likely to have any "surprise" details come up that could affect the terms of your loan. They will "grill" you and require you to send them all sorts of documentation. It is better to work with a lender who gathers everything they may need up front, than one who waits until the week before closing to ask for documentation that will be necessary to complete your loan package.

Ask for references and ask the references questions about these topics specifically. Don't hesitate to ask any other questions you may have about their experience working with the lender.

A few extras

Call us at (801) 969-8989 or contact us via the link on this page.

Finally...

How to "Shop" Loans and Lenders Part 7 of 7 (Extras/Additional Information)

Sat, 01 Aug 2009 15:36:53 -0500

Shopping for a loan does not have to be difficult or complicated. The key is to take control of the process, get organized, and make sure you do it right.

Here are some basics on ONE way to shop for a loan. Click each link for more information on each topic:

Shop the lenders on the same day and at the same time
Make sure all the lenders have the same facts
Figure out the TOTAL Cost of the Loan^SM
Don't skip the "shopping" even if you have a "friend" in the business or a "company special"
Ask for References!
A few extras (and feel free to ask questions here as well)

If you know your credit status, lenders shouldn't need to pull it in order to quote you, so long as all lenders are quoting you based on the same credit worthiness (FICO Score, for example, if you have had it pulled for some other reason recently).

You do need to realize that if you shop this way, and your credit score IS worse than what you told the lenders, quotes will need to be updated based on the new information. There are lenders who specialize in helping only "A" credit borrowers who may not even help you (or may not be able to help you at all) if your credit scores are too low. Likewise, there are lenders who may cost a bit more up front, but who are willing to spend the time and effort to help borrowers with lower credit scores either to still qualify for a loan today, or to guide you through the process of cleaning up your credit enough that you will qualify for a better loan at some point in the future. There is more work involved for lenders who are willing to offer those services, and they should be reasonably compensated for the additional work, if necessary.

Cheapest is not always necessarily the best. Performance, professionalism and full service are important. Empty promises or promises that cannot be kept can actually be damaging to a Buyer under contract on a home.

Yield Spread Premium - Yield Spread Premium is something many borrowers are not aware of until sitting at the Settlement table, if at all. The Yield Spread Premium is money given back to a mortgage broker in exchange for selling you a higher rate than you actually qualified for. The lender may feel they have actually earned this money because of extra work they needed to do on your loan. In my opinion, that is fine, so long as it is disclosed to the borrower up front that the lender will be charging a slightly higher rate than the borrower qualifies for in order to earn this "premium".

As a borrower, you should realize that the Yield Spread Premium can be used toward some of your other closing costs, allowing you to bring less money to the table at closing.

Once again, I simply believe that the borrower should be aware of this so they can make an informed decision about whether or not they would rather pay the lender that extra cost up front, rather than be paying for it at a higher cost (via additional interest) over the next 15 or 30 years.

Call us at (801) 969-8989 or contact us via the link on this page.

Finally...

You won't be spammed by me.

Wed, 08 Jul 2009 08:03:42 -0500

Just a note to all the visitors to my blog and websites. I don't spam. I don't send out email drip campaigns. If you contact me via my website, any response you get will be personally generated by me.

Finally...

Glut of Overpriced Homes Hurts Everyone

Mon, 29 Jun 2009 01:39:35 -0500

People who don't really need to sell their home should not put them on the market at ridiculously high prices.

Prices don't go up 20% just because Sellers LIST their homes at 120% or more of market value. In order for prices to stabilize and/or improve, inventory levels need to shrink or the number of Buyers needs to increase significantly, and quickly.

It doesn't help anyone if more than 63% of the inventory on the market is significantly overpriced.

I work with Buyers Only. We see LOTS of homes. Many of my clients write offers on multiple homes before we get a contract. After lots of negotiations, many Sellers are still 10% above market value and will not budge. My Buyers move on. These Sellers aren't serious. They don't need to sell and won't sell unless they can find a Buyer who is dumb enough to overpay for their home. That's just not likely to happen in today's market.

Because of the amount of inventory, Buyers have the luxury of continuing to make reasonable offers to unreasonable sellers until they find one who is willing to be reasonable and willing to sell their home at (or below!) market value.

Fortunately, there are some Sellers who are listing their homes at or near market value. (Note: THESE are the homes that actually SELL.) Even then, many are still negotiable because of all the competition. (Never mind that most of this "competition" isn't really competition at all.)

My clients aren't the only Buyers who have seen a lot of overpriced inventory and aren't willing to overpay for a home in today's market. Buyers are out there and they will jump on well-priced listings. Multiple offer situations are still common in this economy for well-priced homes. It almost seems that they are more common for a well-priced home... It seems most homes that are priced well are Sellers who are "motivated" to sell.

Bottom line for owners: Do everyone a favor and don't list your home just to see if you can get some uninformed buyer to pay you 20% more than it's worth. Buyers aren't falling for it. Those days are gone. The "boom" is over. Everybody will be better off with less overpriced inventory on the market.

Finally...

RE BarCamp - You will leave wanting more!

Fri, 08 May 2009 18:24:00 -0500

RE BarCamp is a fabulous FREE day of sharing and learning.

What makes a BarCamp the best event you'll attend this year? YOU set the agenda. YOU come to learn and to share only the things YOU are interested in!

The main focus of the Salt Lake BarCamp on June 5th is Social Media & Technology.

Topics Include:

Blogging
Twitter
You Tube
Facebook
Search Engine Optimization
Podcasting
Web Marketing
Google
and MORE!

Come learn about the tools and technologies successful agents are using in this economy. Have YOU found a tool or strategy that has helped your business? Come share it with a group of people EAGER to listen!

BarCamp is:

fun
interactive
fulfilling
exciting
refreshing
eye-opening
motivating
inspiring
powerful
FREE

You can't afford NOT to come to this FREE event if you want your business to thrive like never before, even in this economy!

There will be a wide variety of topics and no hard selling of products or services. This is about SHARING information so that we can all take our businesses to the next level. Recent BarCamps in Phoenix, LA, New York and many other major markets have had as many as 50 or more sessions, all within 1 amazing day of opportunity.

RE Bar Camps are FREE for attendees. There are prizes and giveaways. Lunch will be provided for AT LEAST the first 100 who register, so don't delay!

DATE: Friday, June 5th, 2009

TIME: 9 a.m. - 4:30 p.m.

PLACE: Salt Lake Board of Realtors Campus
230 W. Towne Ridge Parkway, #200
Sandy, UT 8407

Anyone who has ANYTHING to do with a Real Estate Transaction is invited to attend. Again, this is FREE. All we ask is that you register.

An Exclusive Buyer's Agent is the Only Way to Go

Fri, 01 May 2009 18:09:16 -0500

I recently transferred to Salt Lake City from California. Having owned a few homes, and also having dealt with various agents in the past, I did not relish the stress and hassles involved in the home buying process. I investigated my options, and wanted an agent that would be a good fit for me. I wanted an agent who was willing to work only for me. Little did I know that I was about to embark on one of the most rewarding and remarkable adventures of my life.

Benjamin Clark is the best! He made the buying process an absolute pleasure. He was with me every step of the way and made sure that it was as smooth and hassle-free as possible. He was always available and prepared to take me to as many locations as possible, giving me a great overview for location and price. When I found my future house, he handled the negotiations with all the professionalism I could ever hope for. He was knowledgeable, courteous, patient, and tireless in his efforts to find, obtain and help me purchase the right house.

Ben helped make my purchase a truly enjoyable experience. I would highly recommend Ben (an EBA - Exclusive Buyer's Agent) for your real estate needs.

Ben, thank you for everything.

Merlin and Rose Hubbard
Salt Lake City, Utah

Is your job transferring you to Utah? Want to settle down? If you have excellent credit and will be buying a $300,000-$800,000 home in the next 1-3 months and would like an agent who will work exclusively for you, make sure you get an Agent on YOUR side of the transaction! Make sure you hire an E B A! Call us at (801) 969-8989 or contact us via the link on this page.

Finally...

Don't Work with a Pushy Real Estate Agent

Thu, 30 Apr 2009 17:52:04 -0500

I saw this and realized just how different the experience is for clients of Exclusive Buyer's Agents than it must seem to most of the public who work with pushy real estate agents.

British humor and real estate all in one short video clip.

If you want to have a different experience when buying a home, get an agent on YOUR side of the transaction who will work for you and not try and SELL you any home.

If you have excellent credit and will be buying a $300,000-$800,000 home in the next 1-3 months and would like an agent who will work exclusively for you, make sure you get an Agent on YOUR side of the transaction! Make sure you hire an E B A! Call us at (801) 969-8989 or contact us via the link on this page.

Finally...

Beware the Bailout Buzzwords

Mon, 20 Apr 2009 22:19:31 -0500

Beware the Buzzwords.

I had a recent experience with my current mortgage holder that makes me wonder if consumers are accepting "deals" from banks that are not "deals" at all.

First, to be clear: I have equity in my home and I don't need a loan modification. I'm just in the market to refinance because rates are pretty good right now.

I called to get a payoff on my existing loan.
I got transferred to a loan retention department where they had a "special deal" for me if I stayed with them. I think it was something like 1/8 less than my current rate. AND I had to pay origination fee and other junk closing costs...
I told them that their retention rate was terrible. It was 7/8 higher than another option with no points or fees.
They told me I might qualify for a loan modification under Obama's plan.
I told them I likely wouldn't go for that even if I did qualify, but I would listen to their sales pitch just to see how low my special government "bailout" rate could be.
Turns out the Obama "special deal" was only 1/8 better than the lender's deal. Still about 3/4 higher than the rate I had locked in elsewhere with no points or fees. I even pointed that out and asked what was up with that? The rep just said that some people thought it was a good deal and that the program wasn't meant for everybody.

Beware. Not all of the "deals" out there are deals at all.

I just KNOW someone somewhere would be laughing all the way to the bank (pun intended) if I bought into either of those deals.

I'm not saying there aren't a select few out there who cannot benefit from some of the programs out there. But most have to live in an area where no depreciation has taken place in the past 2 years...

Some in the real estate and lending industries feel the most touted "programs" are merely publicity stunts. They wouldn't be surprised to find out some conglomeration of lenders lobbied for such programs. The main benefactors of many programs are not really homeowners, but lenders... "Just follow the money," they say.

I certainly don't even know if the "Obama" program being pitched by my loan servicer was really tied to the "stimulus package". It could just be that lenders are trying to find the "some people" out there who will think the offer is a good deal because they used certain buzzwords in the sales pitch.

If you hear "Bailout" "Obama" or "Stimulus Package" watch out. Slow down. Do your homework.

The lender could just be trying to stimulate their own bottom line...

Finally...

How to REALLY Get a Free Credit Report

Thu, 16 Apr 2009 14:36:21 -0500

Many "FREE" credit reports turn out to not be so free at all.

Some people get charged a processing or handling fee, others get signed up for credit monitoring or other unwanted recurring services.

The Federal Trade Commission sets things straight on their website.

See: http://www.ftc.gov/freereports

The Fair Credit Reporting Act gives you the right to receive a copy of your credit report annually as reported by the 3 main credit bureaus: Equifax, TransUnion and Experian.

Before you fall for a "Free" credit report offer, make sure you visit the FTC's website first.

As they say on their website: Anyone can write a catchy jingle or dance a jig. Here are some ads from the FTC's website. Not too bad if I must say so:

Finally...

5 Reasons Utah is Weathering the Economic Storm

Mon, 13 Apr 2009 14:19:10 -0500

A recent ABC4 news report points out some reasons why Utah is weathering the economic storm better than other states. Diversification seemed to be the main theme. All of Utah's eggs aren't in one basket.

Here are 5 of the examples given:

International Exports
Tourism
Alternative Energy Research & Development
Technology Research & Development
Population Influx - People AND Businesses are relocating to Utah

While Utah isn't an economic Utopia, the diverse interests of it's residents and it's industrial pursuits certainly make it a great place to live.

Utah generally receives favorable scores in surveys and analyses regarding great places to live. Health, access to recreation, educational opportunities and even access to museums and the "arts" all help make Utah a well-rounded place to live with something for almost everyone.

If you plan on relocating to Salt Lake City or the Surrounding Area, make sure you get an Agent on YOUR side of the transaction! Make sure you hire an E B A!

If you have excellent credit and will be buying a $300,000-$800,000 home in the next 1-3 months and would like an agent who will work exclusively for you, call us at (801) 969-8989 or contact us via the link on this page.

Finally...

Owning Becomes More Attractive as Rent's Rise, Home Prices and Interest Rates Fall

Fri, 10 Apr 2009 01:48:05 -0500

Demand for rental homes and units in many parts of the country is on the rise as many homeowners who are unable to refinance their mortgages to today's lower rates because their property values have declined have sold their homes "short" or left them altogether after foreclosure. Increased restrictions for obtaining mortgage financing (high credit scores and larger down payments) have also reduced the pool of renters who "qualify" for homeownership.

As demand rises for rental units, the cost of renting should rise. As inventory of homes available for purchase grows, and demand shrinks (or is reduced due to a smaller pool of buyers who "qualify"), the downward pull on home values takes its toll.

For those with excellent credit, stable employment and a reasonable down payment (about 5% or more will do), this may be the best time ever to purchase a home. Not only have prices been "slashed" by as much as 10-50% in many areas, but interest rates are about as low as they have ever been (just above or just below 5% in recent days).

First time buyers (defined as those who have not owned any real estate in the past 3 years) who make up to $150,000 combined or $75,000 alone, may qualify for up to $8,000 in the form of a refundable Federal tax credit. $6,000 is available for any Utah Buyer who purchases New Construction (1600+ grants available first-com first-served. You do NOT have to be a first-time buyer, but similar income restrictions apply).

You used to be able to say it was smart to buy if you were planning on staying in a home for at least 3 years. This was because it took that long for appreciation to cover the costs associated with selling the home. During the boom, you may have been able to buy a home and sell it in 3 months without taking a loss.

In today's economy, it probably still makes sense to buy a home if you plan to stay in it for an extended period of time (5 years +).

If you do buy a home in Salt Lake City or the Surrounding Area in today's economy, make sure you get an Agent on YOUR side of the transaction! Make sure you hire an E B A!

Finally...

How is Earnest Money Applied at Closing?

Wed, 08 Apr 2009 11:35:02 -0500

Earnest Money is applied as a credit to you at Settlement.

The settlement sheet is basically a balance sheet. The money you owe is on the top of your side (purchase price, closing costs, your portion of property taxes, etc.)

All the money paid on your behalf (loan proceeds, earnest money, the seller's portion of property taxes, etc.) is on the bottom of your side and is a credit to you.

The difference between what you owe and what you have paid (including the Earnest Money) is what you have to bring in to closing (or what is refunded to you if you have brought in too much).

In other words, the earnest money is credited on your behalf, but not directly for any specific cost.

Whatever your total cost to close would have been with no Earnest Money, it will be reduced by the amount of the Earnest Money Deposit you have paid, and you will bring in that much less at closing.

A good lender and title company should have these figures for you and your broker a day or two before settlement. You and your broker should review the Settlement Statements for accuracy and have any corrections made prior to Settlement.

A good Exclusive Buyer's Agent (EBA) can help you select lenders and title companies who perform in a timely manner. Having a reliable lender and a responsive title company will add to the smoothness of your transaction and can eliminate a lot of stress and frustration.

If you are buying a home in Salt Lake City or the Surrounding Area, make sure you get an Agent on YOUR side of the transaction! Make sure you hire an EBA!

Finally...