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30 year conventional rate mortgage remains in the 4.75% to 5.00% range for the best qualified consumers. with FICO score of 740 or higher, a loan to value at 80% or less and pay all closing costs including one point loan origination. 15 year term in the 4.25% to 4.50% range with the same closing costs.
Today I was quoting 4.50% 1 point for the best qualified customers, 30-day lock.
Let’s keep reminding first time home buyers that the clock continues to tick for the first time home buyer tax credit of up to $8,000 which is set to expire on November 30th. I suspect however that the tax credit may be extended for one more year.
In today’s market banks and mortgage lenders are being extremely cautious about which loans they approve. Real estate values are dropping and foreclosure rates are rising, and many banks are dropping out of the mortgage business all together. Gone are the days when banks could sell their loans on Wall Street, reload, and do it again. Banks are now faced with the reality of having to actually hold on to their loans like they did in good old days. This means that they want to make sure that the loans they make at this time are good loans that will pay them back on time.
Nowadays, it seems like all we ever hear about, in reference to mortgage brokers, are the bad brokers; the ones that make headline news and are carted away on TV in handcuffs. What these stories fail to report, is that the bad mortgage brokers make up less than 1% of all the brokers that are licensed in America. In fact, it has always has been the mortgage brokers that have advocated for tougher licensing guidelines, not the banks. They have always argued that by tightening licensing guideline they can eliminate the ‘bad brokers” that give legitimate brokers a bad reputation.
What columnist and reporters fail to mention in their stories is the indispensible service brokers perform in the marketplace. For instance, each bank tends to have their own, distinct, personality when it comes to approving loans. Knowing these “personalities” is where brokers really begin to benefit their clients. Brokers have working relationships with almost every kind of lender imaginable and know each lender’s uniqueness, rates and approval thresholds. This way, they are able to place your loan with the best investor the first time, saving their clients time and money.
Most brokers also have working relationships with the underwriters that work for these lenders as well. This doesn’t mean that they can get bad loans through the system; but it does mean that they can help underwriters see the glass half-full as opposed to half-empty while they are underwriting your loan. In today’s market, almost all mortgages are considered “marginal” and scrutinized by underwriters, having someone on your side is an invaluable asset.
One of the biggest selling points using a broker is personalized service. “So what, all I need is a good rate” is the response I have had from some customers in the past, but consider this. As opposed to brokers, when you submit your loan application to one of the large banks, your loan becomes a number and is pushed through the system as if it was on an assembly line. The monolith lenders usually have a person at the bank accept your application who will never see the loan package again. Those of you that have used the large banks know what I mean, those of you who haven’t, I suggest you try this exercise before committing to a larger lender.
Pretend you have just submitted a loan application a week ago with one of the large lenders. Let’s assume that you have forgotten to give the loan officer a key piece of information that can really help with your approval. Call their 800 number and try to find the right person to give this to so that the underwriter can consider it when approving your loan. This should answer the question, “Why do I need good service.” Another misconception a lot of people have is that you actually pay more using a broker because they are the infamous “middle man.”
This couldn’t be farther from the truth, in fact, most brokers can offer lower pricing than larger banks nine out of ten times. This is because, much like manufactures, money has a retail cost and a wholesale cost, and brokers get the wholesale pricing. Banks have to charge retail for their money because of the added expense it takes to close mortgages. They have to pay loan officers, processors, underwriters and many more expenditures that are involved with closing a loan. Simply put, their overhead is higher than most of the brokers, which results in lower pricing for you. Keep these facts in mind the next time you read an article about “crooked brokers” and remember, honest brokers don’t sell newspapers but they can save you time and money.
Reprint from an articles written by Aubrey Clark author and editor for Direct Banc 08.11.2008.
We are still arranging Home Equity Loans.
In addition to purchasing or refinancing a home, borrowers need credit for things like home improvements, and may benefit from debt consolidation. Understanding those needs, and how home equity financing applies, can help borrowers in these important ways:
With many homeowners staying in their homes longer and looking for cash-out for improvements or other needs, we can offer choices to meet their needs, including cash-out refinances and stand alone home equity financing.
If a customer’s existing 1st mortgage has great terms which makes refinancing impractical, home equity financing may make more sense.
Blended Rate
Combining a conforming or high balance conforming 1st mortgage with home equity financing is an example of how you can leverage our flexible products to structure an attractive alternative to a first mortgage-only solution. It can allow your customers to:
- Benefit from a lower overall rate
- Take advantage of lower LTV or loan amount pricing tiers
- Avoid cash-out pricing adjustor’s on the 1st mortgage
- Have flexible access to their available equity
Cash-out transactions
If a customer’s entire cash-out need is not immediate (such as for paying for education expenses), a home equity line of credit allows them to borrow what they need when they need it.
With the Prime Rate still very low, now may be a great time for homeowners to look at options for home equity financing.
Think Of RealPro Financial First…And For A Second
Contact me with any questions. Thank you!
The mortgage broker is usually an agent for the purpose of arranging the home loan transaction. This relationship imposes a legal duty on the broker to disclose to you the material (important) facts you need to know about the loan. The broker has a duty of fairness and honesty to both you and the lender. These legal duties can be important in resolving disputes which arise after the loan is made, but the best way to avoid problems and disputes is to ask questions and be sure you understand the terms of the loan and each of the loan documents before you sign. When acting as an agent, the broker speaks for you in submitting your loan application to a lender. Make sure that you give the broker full and accurate information, and that any loan application or other document the broker prepares for your signature is accurate and complete before you sign it. Never sign a blank application or other documents. Make sure you understand the terms of the loan before you agree to it. Taken from pamphlet RE 35A (Rev. 3/07) published by the California Department of Real Estate
Many of us, mortgage originators and Realtors are experiencing the negative impact of new appraisal rules. The Home Valuation Code of Conduct, or HVCC, forced on the industry by State Attorney General Andrew M. Cuomo, are slowing down sales and mortgage process.
The change came as a result of the mortgage and housing crisis. Many decision makers blamed the crisis in part on inflated valuations. The new rules are preventing mortgage lenders and brokers from ordering an appraisal directly to avoid influencing or pressuring the appraiser to come up at the desired valuation.
Today most lenders are using independent, third-party appraisal management companies. These companies are middlemen, taking requests from lenders and farming them out at random to individual appraisers.
So now, under current rules, individual loan officers and mortgage brokers, who may benefit from the loan, are no longer allowed to choose, hire, pay, or even communicate with appraisers.
Real estate agents also cannot choose, retain or compensate appraisers, but they can talk to them and provide information or address problems.
I believe we need to demand from policy makers that they modify the new Home Valuation Code of Conduct taking into consideration feedback and recommendations from real estate and mortgage professionals, appraisers, and consumers.
- In order to avoid ending up with a very few large national appraisal management firms, lenders should be required to limit the volume of appraisal orders to a single appraisal management firm to 20%.
- Consumers need to have the opportunity to use the same appraisal report with different lenders. The current system makes it near impossible for the consumers to reuse the same report in the event the first lender who ordered the appraisal declined the loan or offered terms unacceptable to the borrower. Right now the consumer has to pay for a new report, or waste a lot of time waiting for the lender to “release” the appraisal report to another lender.
There are many other changes that are required to better protect and serve consumers. Right now I am suggesting you do what I did which is to sign an online Petition to Rescind HVCC has it stands today. Yes, we need change but we need the kind of change that will really benefit consumers instead of policy changes imposed by overreacting politicians.
Please click on the link below if you want real change.
www.hvccpetition.com
While surfing the Internet I came across an article posted on www.themortgageinsider.net on 4/02/2008
The slogan form the authors of the site is:
The Truth from the Trenches by Industry Insiders, Rob K. Blake & Terri Ewing
You will see reading their article that one has to wonder what trenches these two guys are from. Definitely not from the mortgage origination trenches…
Here is a reprint of the article followed then by the comment I sent just today..
Mortgage Lock Fraud Abounds
Mortgage originators tell you your mortgage lock is in force when it is NOT. Lying about your mortgage lock status is a common practice to increase loan revenue or cover loan officer mistakes.
Loan officers are always trying to make the most yield spread revenue on every mortgage. Telling you the mortgage lock is placed but then not actually locking the rate with the wholesale mortgage company allows them to “play the market” with your money.
Why do originators tell mortgage lock lies?
They tell lies simply to cover mistakes made at the time they quoted the rate. If they forgot to adjust the rate for low credit scores, higher loan-to-values, or to waive escrows, these mistakes become evident at the time of lock.
Loan officers also tell lock lies because of a false belief they can “call the market” and pick the day that makes them the most yield spread premium, they will risk your mortgage lock and lie to you about it.
What if they are wrong?
When they are wrong and the market moves against them, you get the higher rate and costs…paying for their mistake.
The most important thing you need to remember is the loan officer will NEVER pay when a stunt goes wrong. I wonder on what data or studies you are basing your opening statement on? What knowledge of the mortgage origination industry you have to state that “Mortgage originators tell you your mortgage lock is in force when it is NOT. Lying about your mortgage lock status is a common practice to increase loan revenue or cover loan officer mistakes.”
THIS IS MY COMMENT SENT TODAY TO MORTGAGE INSIDER
I have been a mortgage loan originator since 1989 and I can tell you that the mortgage origination industry’s practices are no better or worse than in any other industry.
You do not need to sensationalize your article in order to get your readers’ attention. Your direct implication that lying to the consumers is ‘common practice’ is irresponsible and offensive.
For your information, what is common practice for most mortgage originators is to provide a copy of the rate lock confirmation to the consumer. The written confirmation will typically state the date, terms, and yes, even the yield spread premium.
You could have done a better job informing and educating your readers by suggesting to them they demand a copy of the lender’s rate lock confirmation instead of relying on a verbal confirmation from the mortgage originator.
Lenders usually issue a Loan Commitment labeled “approved with conditions.” It means that the loan approval is subject to a list of conditions that must be satisfied or cleared in order to complete the transaction. It also means that ALL conditions must be satisfied or cleared before the loan will fund.
In order to get a “final” approval all conditions required by the loan underwriter will need to be addressed to the satisfaction of the lender. Until then you do not have a real approval.
Too often loan professionals will notify their clients that they have loan approval when in fact they only have a CONDITIONAL APPROVAL.
The approval is worth nothing if the borrower cannot satisfy the conditions required by the lender. The loan agent is left with an upset client who was first told the loan was approved to discover that the lender’s conditions could not be met.
So the lesson to learn is that it is important to explain to the borrower at the time of the loan submission that a loan commitment is not exactly a loan approval until it is final.
Incidentally, the lender’s commitment to fund the loan shall be null and void if the lender discovers material changes in the financial condition (yes lenders run last minute credit check) employment (last minute verbal employment verification), cash equity, occupancy (don’t even try to lie about that…FBI anyone?), or any material situations prior to or at closing. Even a final loan approval is not a 100% sure thing until the loan is closed.
Tags: home loan, loan, loan approval
Because FNMA or Freddie Mac will not purchase mortgages secured by non-warrantable condominiums, it is near impossible, in this current market climate, to find a conventional lender willing to lend on non-warrantable condos. The only available options are from hard money lenders. That means high interest rate, very large down payment, and increased loan origination cost to the point that many borrowers will simply not go through the transaction.
My advice to real estate professionals is to steer your buyers away from making an offer on a non-warrantable condominiums until the GSEs and lenders relax their guidelines on such condos.
Non Warrantable Condos are not eligible to be sold to Fannie Mae or Freddie Mac because they DO NOT fit into one of the following three classes:
CLASS I
1. Developers control of the homeowners association has been turned over to the condo owners
2. Project is not subject to additional phasing or add-ons which have not yet been completed
3. All common elements and amenities must be fully installed, completed and in operation
4. 70% of all units in the entire development must have been sold and or legally obligated to close
5. 70% of all units in the entire development must have been sold to owner occupants
CLASS II
1. Recent or current condominium conversions (from apartments)
2. Homeowners association has been controlled by the unit owners (other than the developer) for less than two years
3. Project is not subject to phasing or add-ons which have not yet been completed
4. All common elements and amenities are fully installed, completed and in operation
5. 70% of the units in the entire development must have been sold and/or legally obligated to close
6. 70% of the units in the entire development must have been sold to owner occupants
7. No more than 15% of the current unit owners are more than one month delinquent in payment of homeowner’s dues or assessments
CLASS III
1. Homeowners Association has been controlled by unit owners (other than developer) for at least one year
2. Project is not subject to phasing or add-ons
3. All common amenities are fully installed, completed, and in operation
4. 90% of the units have been sold (owner-occupancy of at least 60%)
In the current financial climate the big are getting bigger and the weak are getting weaker. It is more evident in the mortgage lending industry where Bank of America and Wells Fargo are left to dominate. The two are now close to 50% of all loan productions. Distant third and fourth are Chase and Citigroup. Nonbank mortgage lenders appear to be a dying breed. Without a continued and uninterrupted access to warehouse credit they are in danger of extinction.
A cartel of sort is emerging with all the negative consequences for consumers. Unless something is done to open up the credit market to nonbank lenders we will have created these “monsters” too big to fail.
 If you are thinking about purchasing a new home, don’t wait until you find the perfect home to get prequalified! Make sure your credit is healthy and find out how much you can qualify for before you find the home of your dreams. This helps insure that you not only choose a home in the right price range, but help avoid falling in love with a home that you can’t afford!
Another great reason to get quaified as early in the process as possible is to insure the fastest closing possible. If there are multiple offers going in on a home, you may be at a disadvantage if you are not able to secure financing quickly. Don’t wait until the last minute!
We have home purchase specialists standing by that can give you FREE home purchase finance advice. Feel free to request a FREE Rate Quote or to Contact Us directly.
Tags: Home Loans, Home Purchase, Mortgages, New Home Purchase, Pre-Qualify
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