Welcome to a Full Doc WorldHello...and Welcome to a Full Doc World! Over the course of the last couple of months, I have witnessed changes to the lending process that have been more severe than all of the other changes since I have been in the business. This is in part due to fear...but let's face it, this is mostly due to money. When financial entities lose money...things change! When they lose large amounts of money...things change quickly! I want to introduce you to the new world we live in...The Full Doc World. We as a Mortgage and Real Estate Professionals have a choice to make at this very moment, learn to live in our new world or find another career. You see in a Full Doc World, everything is on the table. Just when you think your done, something else may come up. Is it convenient, NO! Is it reality, YES! If you choose not to face this reality, you will be doing a great disservice to your clients and yourselves! Below I have outlined what a Full Doc World really means. Many of the items that I outline below are not going to sound very fair. Please understand that these are not specific to my company, this is an industrywide tsunami that is mowing us down as we sleep! Consider this post as the high rise hotel that may help keep you dry. If there is a broker or bank that is not currently playing by the following rules, they will start VERY SOON! Unfortunately, it may be at the tail end of one of your transactions which may cost you a closing or a client. Prepare yourselves folks because if you thought it was tough before, it is about to get a whole lot tougher! I myself had to come to a realization recently. This change was going to happen whether I wanted it to happen or not. When I had my epiphany, a great big smile came over my face. I GET IT!...and because I GET IT, I will be better prepared to move forward in this world from here on out. My buyers and the Real Estate Agents that I work with will stand a better chance of getting their transactions closed. Some of these buyers and agents may walk away in the near term, but when their realization comes, they will understand and hopefully come back. Below are the dark and gruesome truths as I am finding them out. Read with caution and understanding...and welcome to The Full Doc World!
Buyer's Income and Asset Documentation: These are the two most important pieces to a Full Doc loan. Please don't get these confused with the income and asset documentation from 1 year ago or even 3 months ago. A simple Verification of Employment and 1 paystub WILL NOT work in our new world. This documentation is required and must undoubtedly support the buyers income. If there is a discrepancy, the err will be on the side of caution. If a guideline states that overtime income must be supported by twelve months on the job, it needs to be twelve months, not 11 months and 25 days. There are FEW if any income exceptions in this world. For assets, we need to see them and they will be verified. There are no letters of explanations as to why a buyer's name only appeared on the most recent statement or exceptions for reserve accounts being a dollar short. In addition to these unnerving requirements, when these documents are provided to underwriting, EVERYTHING INCLUDED IN THESE DOCUMENTS IS FAIR GAME. Underwriters will not look the other way, if there is a large deposit that they can not identify, it will be conditioned to be explained AND supporting documentation provided.
Stated Income and Reduced Doc Loans: These loans are all but gone. The FBI has reported that misrepresentation of income has been the most prevalent form of mortgage fraud over the last couple of years. Mortgage Banks and Lenders have seen their stated income portfolios deteriorate in terms of performance. Mortgage Insurance companies will no longer insure stated income loans in Clark County. In a Full Doc World, these loans exist but are rarely used!
Prior to Closing Conditions: Expect quite a few of these conditions, prepare your buyers that they will be coming. If we catch these items on the front side, the conditions will be fewer on the back side. Before we could "wait to see if the underwriter will request it", now we must expect for it to be a need to close the transaction. If they don't catch it in the beginning, the second set of eyes will catch it in the middle. Should both miss it, rest assured the third, fourth or fifth set of eyes WILL NOT! Does it sound daunting, well it is! Some buyers may feel like they are being "singled out" and are continually being asked for more and more conditions. Please let them know that while they are special, they are not unique! All buyers will be going through the same level of scrutiny that they are.
Appraisals, Inspections, and Re-Inspections: All are on the table and will be requested. "As is" is not an acceptable answer to an FHA inspector. "We don't do repairs on our foreclosed properties" is the mantra of an asset manager that does not want to sell his clients properties. If there is a safety, security, or collateral issue on the appraisal or any inspection involved in the transaction, expect the underwriter to request it to be corrected. This was not the norm 1 month ago today, but it is the new norm in a Full Doc World!
Closing Times: What all of these things add up to is increased closing times. Before, 30 days was considered an eternity for a closing to occur. The new reality is that closing will best be determined by the work that Mortgage and Real Estate Professionals do in advance. Docs will be held for the i to be dotted, and funding will be postponed until the t is crossed. In a Full Doc World, don't worry about how quickly you are going to get paid just be grateful that you are receiving a check. Our positions as Mortgage Professionals have just become astronomically more difficult. Your career as a Real Estate Agent has now become increasingly more dependant on aligning yourself with a true Mortgage Professional. Experience and knowledge will once again be King! Those that choose not to conform WILL FAIL. The ability to successfully identify landmines, hurdles, and challenges before they come to be is the most important factor in closing a successful transaction. This WILL inevitably separate the best from the rest! Welcome to a Full Doc World! Rey Gallegos Mortgage Professional REDC Foreclosure Auction Las VegasThe Las Vegas REDC Lender Foreclosed Public Home Auction is coming up this weekend. The previous REDC Auction last year was hugely successful. There are over 280 Properties slated to be auctioned at this event! I have been named an Auction Home Loan Consultant for the Preferred Auction Lender and am able to issue pre-qualification passes to enter the auction. If you are interested in attending, or if you are a Real Estate Agent and have a client that is interested in attending please contact me directly so that I can pre-qualify you or your client. You can also use my secure online Quick Pre-Qualification Form. In the comments section of the form, be sure to note that you would like to attend the auction. Keep in mind because it is a secure form, it takes about 30 seconds to load so please be patient. Once qualified, you will receive an auction pre-qualification form that serves as your entry, as well as an auction guide that was assembled by my team from the last public auction. This guide was developed based on the events that transpired from the last public foreclosure auction. It has been designed to help you and your clients navigate the controlled chaos that is a public auction and will help you avoid common pitfalls. I will also be at the auction pre-qualifying late comers and once properties are auctioned off, I will be submitting the mortgage loans for those that have won properties. Auction Dates and Locations are as follows: LAS VEGAS 1
For more information about the auction or to view properties, register, and more please visit the US Home Auction website. You can also call 1.800.690.REDC. When asked about pre-qualification just say you have already been pre-qualified by an auction lender and contact me right away! Your Mortgage Partner for Life, Rey Gallegos Home Loan Consultant Reverse Mortgages in Las Vegas, Trending Upward!I spend a large part of my day analyzing my business and the Las Vegas Real Estate and Mortgage Industry in general. I keep my eye on trends and attempt to figure out why the trends are happening. One trends that has particular intrigued me is Reverse Mortgages. Today, Reverse mortgages are likely the only segment of the mortgage industry trending upward. This upward trend doesn't show any signs of slowing anytime soon as:
Based on these figures, this will soon become a large market for Mortgage Originators especially in Las Vegas. As always, when there is a new trend you can rest assured that there will be unscrupulous originators trying to exploit the trend and make a quick buck. In my previous post, Reverse Mortgages in Las Vegas, a Great Option for Some, I outline some of the features of Reverse Mortgages and how they pertain to the Las Vegas market. I can not stress enough that if you or some one you know are in the market for a Reverse Mortgage, seek out an expert in the field with a reputable company. If you are unsure where to find one, feel free to contact me directly and I can assist you. Your Mortgage Partner for Life, Rey Gallegos Jumbo Rates in Las Vegas, Manageable With a 3-2-1 BuydownMany Las Vegas residents that fit into the Jumbo Loan category, loan amounts greater than $417,000, know the woes of high Jumbo Loan rates. Since the beginning of the Mortgage Crises, Jumbo Loans were hit hard as Wall Street all but stopped buying these loans on the secondary market. This led to a quick increase in Jumbo Loan Rates which has remained to this day and does not seem to have an end in sight. Unfortunately, because of the higher cost of housing in the Las Vegas Valley many potential homeowners that would like to purchase are faced with a dilemma. Should they buy a less expensive home or put down a larger down payment to keep their loan amount below $417,000 and avoid the steep increase in interest rate? This is a tough decision, especially because of looming economic concerns. There may be a solution that could help. It's no secret that in our current market, Sellers and Builders are giving major incentives to Buyers. Buyers should take advantage of this current phenomenon and use it to minimize their interest rates and payments for a short period of time. It is called a 3-2-1 buydown and here is how it works: If your Jumbo Note Rate on a 30 Year Fixed Rate Mortgage is 7.25%. A 3-2-1 buydown would reduce that rate by 3% the first year, 2% the second year, and 1% the third year. The cost to the buyer is dollar for dollar equal to the savings for those three years. Are you confused yet, me too, I will illustrate: 30 Year Fixed Rate Jumbo Loan = 7.25% Loan Amount = $500,000
The total savings to the Buyer equals $23,200.08 over three years. The total cost to the Seller/Builder equals $23,200.08. Now-a-days with the amount of incentives that Las Vegas Builders are giving out they should be more than happy to give this as an incentive if it means selling a home and not having to reduce their prices any more than they already have. As far as people selling a home in Las Vegas, this could be a great way to entice prospective buyers to make an offer considering the amount of savings that they would see over the first couple of years. Finally, I have saved the best for last. YOU QUALIFY AT THE BOUGHT DOWN RATE! Yes, you qualify at the bought down note rate. So in the above scenario, you would qualify at a payment of $2,459.70 instead of $3,410.88. This is perfect for the people that are expecting annual pay increases or will use the savings to pay off other debt. Once the fourth year comes around they will have the income to make the payment. I want to stress that if you can not afford the payment in the fourth year this loan enhancement is not for you. It is designed to give buyers the benefit of having for the first couple of years that they own their home. If you have questions about a 3-2-1 buydown for the purchase or refinance of a Las Vegas Property , please feel free to contact me directly. Your Mortgage Partner for Life, Rey Gallegos Reverse Mortgages in Las Vegas, a Great Option for SomeI like to research loan programs and scenarios I am not familiar with. One of those programs happens to be Reverse Mortgages. For those of you that do not know, Reverse Mortgages sometimes carry a very negative connotation with them. What is a Reverse Mortgage? A reverse mortgage enables homeowners aged 62 and over to convert part of their home equity into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment. The reverse mortgage is aptly named because the payment stream is reversed. Instead of making monthly payments to your Mortgage Bank, as with a regular mortgage, your Mortgage Bank makes payments to the you. Types of Reverse Mortgages:
Key Features of a Reverse Mortgage
There are two types of Reverse Mortgages, the Line of Credit (LOC) and the traditional Reverse Mortgage. The LOC allows you to draw money when you choose to. The standard Reverse Mortgage pays monthly based on the set up of the original loan. Is It a Good Loan? As with ANY loan program, if the borrower can benefit from the loan, it is a terrific product. If you are on a fixed income and paying $700 per month for your mortgage, that can take a big dent. If you set up a reverse mortgage, you can not only eliminate your monthly mortgage payment but also get a monthly payment from the bank to you! You can see how that would benefit a lot of 62+ homeowners. This Sounds Right for My Scenario, Now What? The most important thing to do is to contact a REVERSE MORTGAGE SPECIALIST. Do not just contact the first name you see in the phone book. The Mortgage Professional that you contact should be specially trained and have experience writing these mortgages. If you have any questions or need the recommendation of a good Reverse Mortgage Specialist in your area, please feel free to contact me directly. Your Mortgage Partner for Life, Rey Gallegos Buying a Las Vegas Home, You NEED an Experienced Loan OfficerIf you are in the market to buy a home in Las Vegas, I have two very important things to tell you;
First, I believe you have made a terrific decision to buy a Las Vegas Home. Although Las Vegas has been one of the hardest hit areas in this declining market, many of the factors that drive this market have not changed. I have listed some of those key factors below:
Once you have made a decision to buy in Las Vegas, your next step should be to find a quality Loan Officer and get Pre-Approved! The current mortgage market is in shambles. Changes are coming down daily from Freddie Mac, Fannie Mae and all of the major lenders. It is important that you find an experienced Loan Officer that KNOWS what the current market is doing and can anticipate changes that are going to soon happen. No longer should you trust just anyone with the financing of your most valuable asset, which is your home. In the past couple of years, too many homeowners played "pin the tail on the donkey" with their Mortgage Lender and LOST! Before you move forward with any lender your should ask a couple of very important questions:
If you get push back from the Loan Officer, RUN! That is not the Loan Officer for you. Any good Lender should answer every question with a solid answer and not have to think about it. Our jobs are to know what is going on in the current Las Vegas market. We should also know what programs are available and if we offer them or not. Do your homework and make sure that the Loan Officer has the experience and knowledge to make things right for you. If you have any questions about buying a home in Las Vegas or the current state of the mortgage or Las Vegas market feel free to contact me directly and I will be happy to help you. Your Mortgage Partner for Life, Rey Gallegos
FHA Refinance Loans in Las VegasIt seems as though every day the number of viable refinance programs for Las Vegas homeowners decreases. So it is up to us as Loan Officers, to help home owners reconnect with great refinance programs that were not considered before BUT have always been around. A prime example of this is the 95% FHA Cash Out Refinance. You may be asking, 95% Cash Out in Las Vegas? Yes, in Las Vegas! For those of you that don't know, Las Vegas has been classified as a "Soft Market". In not so many words, Mortgage Banks are more conservative with their guidelines in "Soft Markets". Meaning if the maximum guidelines for a loan program are 100% Loan-to-Value (Amount of the Mortgage Loan versus the Value of the Home in Terms of a Percentage), in a "Soft Market" they would be reduced by 5% for a Maximum of 95%. FHA Loans are not affected by the soft market policy. So FHA will allow a Cash Out Refinance up to 95% of the homes value even in Las Vegas. With interest rates being so low these days, FHA Loans offer a tremendous savings in your monthly mortgage payment. The key items that determine eligibility for an FHA Cash Out Refinance are as follows:
As I said before this loan has been around for quite a while but has not been used. This FHA Refinance Loan could help many Las Vegas homeowners. Should you have any questions about this or any other refinance, please feel free to contact me directly. Your Mortgage Partner for Life, Rey Gallegos Refinance VA Loans in Las VegasI have always been a big fan of VA Loans. In the Las Vegas area, VA Loans have become extremely popular for many reasons. First, the VA has not instituted a 5% Soft Market Policy in Distressed markets. What that means is that it is becoming increasingly more difficult to buy a home with no money down. Unfortunately, Fannie Mae AND Freddie Mac have put Las Vegas into this category. However, with your VA Loan benefit you can still use a purchase a property with NO Down Payment. This is exciting for the Men and Women that have served our country. So many people know about buying a home with your VA Benefit BUT most people don't know that they can refinance their home into a VA Loan weather or not their current loan is through the VA. Some outstanding key options for a VA Refinance are:
I have been a huge advocate of government loans for Las Vegas properties in recent months. If you have any questions please feel free to contact me directly. Refinancing Your Las Vegas Property In a Down MarketIt is no secret that the state of the current housing market is flat out terrible. Many people that need to refinance are unable to do so because they owe more than their Las Vegas properties are worth. There are still many homeowners that would like to refinance for a variety of reasons such as:
Because of the low interest rates now is a terrific time to refi as long as you can qualify. If you are one of those Las Vegas homeowners that needs to refinance, I would keep a couple of things in mind going into the transaction:
If you have any questions about your Las Vegas or Nevada Refinance feel free to contact me directly. Your mortgage partner for life, Rey "Steak Dinner" GallegosSenior Loan OfficerFive Star Mortgage Email: rey@steak-dinner.com www.4NevadaHomeLoans.com Proud member National Association of Mortgage Brokers VA Loans in Las Vegas, Key Changes in Your VA BenefitThe VA Zero Down Home Loan is one of the best kept secrets in lending. In the past, many 100% Financing options have over shadowed this mortgage loan but recently we have seen a tremendous resurgence of the VA Loan in the Las Vegas area. This loan is quite simple to understand and qualify for as long as you are a Veteran with the VA Loan Entitlement. VA Home Loan Features:
New VA Loan Limits: Ginnie Mae who is the government chartered corporation that insures VA Loans has raised their loan limits. The new loan limit for VA Loans is $650,000. This new loan limit is terrific for the Las Vegas market, as the prices are a bit higher than the rest of the country. Even though the VA Loan limits have been raised, loans that are above the conforming loan limit, $417,000, do not carry the same guidelines as a traditional VA Loan. The qualifying veteran is required to cover 25% of the difference above $417,000.
Other Key Items To Note For VA Home Loans:
You can find more information on my Las Vegas VA Loans Here. Your mortgage partner for life, Rey "Steak Dinner" GallegosSenior Loan OfficerFive Star Mortgage Email: rey@steak-dinner.com 4NevadaMortgageLoans.comYour complete community mortgage broker Proud member National Association of Mortgage Brokers |
Rey Gallegos Home Loan Consultant Las Vegas, NV Las Vegas, NV More about me… A Mortgage Bank Office Phone: (702) 808-8328 Cell Phone: (702) 808-8328 Email Me
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