Very good information for potential buyers.....I am a REALTOR(R), not a mortgage expert - consult and ask questions for yourself and you will do well.
How many of you feel lost out there or even get help from someone such as a realtor letting you know that they can have their mortgage loan officer help you with your loan, yet you could still be lost. Not all referrals are good ones, just food for thought. I know this, because I have seen it happen more than it should, after a borrower comes to me after they had used someone else that was recommended. No, I am not perfect. But there is a lot more than just telling a borrower a rate and costs after looking at a credit score.
This post is not to point fingers, but to educate not only the borrower/consumer, but the realtor and some loan officers that might just do the basics. What do I mean about the basics?
Borrower : I am looking for the cheapest mortgage with no points. What can you do for me.
Loan Officer : What is your credit score?
Borrower : 659
Loan Officer : I could do 5.25% with zero points.
Borrower : Sounds great. Thanks and I will get back to you.
Important Update (example above) :
You should have received a Good Faith Estimate when someone gave you a quote. To show rate, points, and fees. And that loan officer should have asked about 10 basic questions, which I will talk about below. Important news now on this…. As of January 1st, 2010, there is now a new law in regards to RESPA and new disclosures. Please read below…
As of January 1st, 2010, no loan officer and or lender will be able to give you a Good Faith Estimate upfront when shopping for a mortgage. There will be about 6 triggers that have to take place for them to offer the good faith estimate. I think this will hurt shopping for a mortgage now more than ever before.
What has always been a pet peeve of mine is that many loan officers just give you what you want to hear. Yet they don't ask you some very important questions. One of those main questions should be about your goals, no matter if you are buying or refinancing. What questions should they be asking?
1. My first and biggest question. How much of a mortgage payment would you be comfortable with? A payment range, to include taxes & homeowners insurance.
2. How long do u plan on staying in the house. Yes, the borrower doesn't have a crystal ball, but many still have an idea. And this question should be broken down to 3 years, 5 years, and 7 years. Please read : My 10 top questions when interviewing a borrower.
2 very important mortgage tips :
1. Credit Scores - There are still some lenders that can do credit scores under 620, down to 550. Beware, they are almost impossible to close. I am getting about 2 e-mails a week now from borrowers that were told no problem, and the lender can't close. There are many reasons for this.
2. Making offers - I am also getting e-mails from those that just put an offer in on a house and now want to see about getting a mortgage. First and fore most, speak to a well qualified loan officer. And even though this loan officer should be interviewing you, interview them. Truly understand who you are dealing with and the company that they work for, no matter how you got their name. I can't stress this enough. SO much can be found on the internet about individuals and companies now.
Summary : Overall, there are going to be more issues when moving forward in 2010. Any loan officer that gives a true Good Faith Estimate upfront, could very well be out of compliance. Yet, if we aren't allowed to do this, how can a borrower shop effectively? What, just give the borrower a rate over the phone? That use to get under my skin from day one in this business, because anyone could do that. Rates change daily also. In any case, I will be talking about the new RESPA laws and breaking down the importance of this in Part 2. For a quick example to a negative impact on this new compliance, Gerry Suarez gives a good example of this. The Road to Hell and the new mortgage disclosures.
For some more good reading :
- Mortgage shopping tips - The new Good Faith Estimate, 2010 RESPA compliance issues. - Part 2 of 2
For more information on FHA loans, please go to this link. The FHA Expert
For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc