Questions, questions, questions

Mortgage and Lending with First Priority Financial NMLS #243484

My industry has seen more changes in the last 20 months than I have seen in the last 20 years. I just take all of the changes that come down the pike and I roll them into my business and move on. I usually have a pretty sunny disposition but sometimes it just gets to me....

 A big question these days is what loan to use and why. There is a basic rule of thumb here that if you want to put less than 10% down, then FHA is a better loan for you and if you want to put 10% down or more, than a conventional loan is a better deal. Rules of thumb are guidelines and I find myself feeling like a ping pong ball sometimes in conversations with clients. In order to avoid this feeling, I try and gather as much information as I can before giving advice. Here are some subtle differences:

 FHA is an insurance program; if you meet the criteria then your loan is approved and able to be insured by FHA. This means that you pay an upfront Mortgage Insurance Premium (UFMIP) and monthly MIP as well. FHA loans allow you to have lower credit scores, lower down payment, higher debt ratios and one set of guidelines and one underwriter on your loan. A special FHA loan even allows you to finance the fix up costs on that home that the Realtors advertise as "Needs TLC" or "Contractor Special".

 Conventional loans are stricter on debt ratios, credit scores and down payment. If you put between 10% and 20% down then you will have Private Mortgage Insurance (PMI) and that is managed by another company with their own stricter guidelines than the loan itself.  This makes sense because PMI insures the lender against losses just like FHA but they are a private company and they decide what they will and won't accept. Many times we are able to approve a conventional loan but not able to obtain a PMI approval and so we either have to have the client put 20% down and avoid PMI altogether or switch to FHA. Are you feeling like a ping pong ball yet?

 As a mortgage professional I need to analyze my client's needs and qualifications and match them to the right loan program. If I don't choose the right mortgage program from the outset, we may lose a lot of time and money. If we get a conventional appraisal and we have to switch to an FHA loan, somebody ends up buying two appraisals. Of course, I don't' want to charge clients for appraisals they don't need at $400 a pop but I also don't want to pay for unnecessary appraisals myself (it's just bad business).

So when a client calls me and asks me "What is your rate?" and I tell them that is the wrong question to ask, usually the next question is "What is the right question?" and the answer changes depending on what I have been dealing with that day and my general mood but usually the answer is something along the lines of;  " Can you help guide and educate me through the loan process in this day and age?"  or "How many purchase transactions have you closed in the last 90 days?".  The bottom line is that you want someone who is a full time professional who is closing loans in this market and someone who comes highly recommended by real estate agents and someone that you feel has your best interest at heart and is working from a place of honesty and integrity.

 So to find the right home, it is always Location, location, location and to find the right home loan it is always question, question, question.

 Happy House Hunting.

 Please email or call me with any real estate and mortgage related questions. I am happy to answer you and it may become the topic of a future article.

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I have been in business for over 25 years and I still love what I do. Please give me a call and find out why most of my business is referred to me.   (707) 887-1275   Office          (866) 385-1650   Toll free


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Vickie Nagy
Palm Springs, CA

You're so right about the recent changes. It's certainly a very challenging time in the mortgage industry.

Nov 12, 2009 04:48 PM #1
Hans Bruhner
First Priority Financial - Sebastopol, CA
Sonoma County Home Loans

Thanks Vicky. I love your title it is really great. My business coach told me never tot ell people I am a mortgage broker or banker because they have a mental picture of what that is and you don't have a chance to influence that thought. I am in the business and I had to ponder what it is that you do so Bravo to you. I am going to send you a late night prize.........

Nov 12, 2009 04:54 PM #2
Anthony Ebright - NMLSR ID #247647 Purchase and Refinance Mortgages
FHA, VA, Conforming, Jumbo - Wells Fargo Home Mortgage - Santa Rosa, CA

Hans! Nice to see you back here! I totally agree with you, question, question, question! Whenever someone asks me for a rate, I will usually ask them a dozen questions in order to give the most accurate quote possible. If the rate is all they're interested in, then I'm not the right lender. Like you, I provide a service that's very valuable and it's not covered in the rate. Keep up the great work. You do have a wonderful reputation and I am happy to vouch for you any time!

Nov 12, 2009 05:11 PM #3
Hans Bruhner
First Priority Financial - Sebastopol, CA
Sonoma County Home Loans

Wow! Anthony, that is a great thing to say and I really appreciate your comments. Likewise, I am glad to see you out there thriving and there is always room for the true professionals to make a living out there.

Nov 12, 2009 05:23 PM #4
Michelle Carr-Crowe-Top 1% Diamond Certified Real Estate Team Sells Cupertino San Jose Homes-Just Call 408-252-8900
Get Results Team...Just Call (408) 252-8900! - San Jose, CA
Family Helping Families Buy & Sell Homes 40+ Years

Good points. It's tough out there and you've done a nice job of presenting your value.

Nov 12, 2009 05:39 PM #5
Tony Grego, 317-663-4173 #1 Trade Association for Alternative Inv
REISA - 317-663-4173 - Indianapolis, IN

good points about FHA. I just hope the things I hear with funds is settled quick. But like all FHA is changing and it will get harder. Anyone on the fence needs to decide what to do and get a mortgage.

good post


Nov 12, 2009 08:48 PM #6
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Sonoma County Home Loans
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