The first thing a client should hear from their real-estate agent before starting to look for a new home is “Get pre-approved”.

As a seasoned lender, if I had to advise on the next step after getting pre-approved, it would be for clients to get all their rate shopping and comparative analysis out of the way ASAP . Often times buyers decide to shop for a rate, compare mortgage terms, or try to negotiate for lower fees after they have an accepted offer and have opened escrow.

Unfortunately for these clients, this is a backwards way of doing business.  By the time an offer is accepted and escrow has been opened, the count down on your 30 day escrow has already begun.

Spending the first 1-2 weeks of escrow trying to manipulate the system, find that magic lender who will provide a 0.125% lower rate, or pitting mortgage consultants against each-other in hopes of saving $500 is a waste of time.

In today’s market with a standard 30 day escrow, playing these games and trying to rate shop can easily delay a closing by 10 days or longer.  These closing delays are not only frustrating to the buyer and the seller, but also be very costly and potentially put your transaction at risk.

Considering most foreclosures, short sale approvals, and many standard deals carry a $100-$200 per diem penalty for late closings , the savings a client may have managed to obtain by  aggressively shopping can quickly get eaten up by these late fees and other closing concessions.

Additionally, during the time a client spends rate shopping and not committing to a lender, there is no guarantee rates will go down.  As likely as rates are to drop, they are just as likely to rise.

So if you are thinking about doing some aggressive rate shopping or comparing the fees of ten different lender, I strongly recommend you do this prior to an offer being accepted.

-Contributing article by Thomas Bayles, found on facebook here

I once saw a bumper sticker that said… “To err is human, to really screw something up, you need a computer”.

In today’s super faced paced, ridiculously “plugged-in-world”, information travels from one source to the next at lightning fast speed.  Although certain areas of the mortgage and real-estate industry generally lag slightly behind the cutting edge of technology, the speed at which information is processed is a little scary. Read the rest of this entry »

Many of my clients utilize a fairly well known tax deduction know as 2106 Non-reimbursable business expenses.  Basically, if you encounter business expenses required for your job or profession, and are not reimbursed by your employer, you can deduct these from your overall income.

Examples include un-reimbursed training, supplies, equipment, and professional licensing fees.

These are a great tool for reducing your overall tax liability; however, these deductions are also taken into consideration by loan underwriters as a deduction to your income.

If for example you show $12,000 per year in un-reimbursed business expenses, the underwriter will reduce your verified income by $1,000 per month.  The rationale is that these business expenses are your on-going costs of staying employed and will continue to decrease your total earned income.

As always, if you are planning to buy or refinance a home, it’s important to have a conversation with your lender as soon as possible about your tax returns.  Unfortunately, saving a few thousand dollars on your taxes could reduce your income to the point of not being able to qualify for a loan.

In today’s market, many clients simply do not show enough income or assets to qualify for a home loan by themselves.

One way to still be able to purchase a home or refinance your existing mortgage is to find a co-signer. Read the rest of this entry »

Anytime there is a buyer’s market in real-estate, the numbers of “Lookie-Loo’s” and “fake” buyers increases dramatically.

Mortgage processing centers around the country have been slammed with pre-qualification files for clients who may not be serious about ever purchasing a piece of property.  This, in turn, slows down processing times for serious buyers. 

To help filter out the serious buyers from the applicants who aren’t serious, several banks such as Chase and B of A are now charging a $200 – $300 in pre-approval fee.

This fee, as of today, is a seperate fee from additional application fees associated with the real deal application that begins once a property is identified and a purchase contract signed.

When the new HOEPA / HERA laws go into affect on July 30th, 2009… these banks may have to suspend the collection of up front fees.  However, for the time being, clients may be facing hundreds of dollars in up front fees just to see if they are qualified buyers.

As of now, your trusted lender is not requiring an application fee for pre-approvals.   By processing much of the loan file internally, I can continue to process pre-approvals in good faith and without an up front fee. 

Working with well qualified, serious buyers, is the key to keeping this fee out of my normal work process.

A newer loan condition I’m seeing on virtually all loan approvals is the underwriter’s request to “source” deposits.  It use to be that if there was a substantial deposit, in the $10K or greater range,  into a bank account used for approval; underwriters wanted to know where those monies came from.

Unfortunately, like most lending conditions in our current market, this requirement has been taken to the extreme. Read the rest of this entry »

Over the last several weeks I’ve heard a growing segment of buyers, friends of mine, and property investors complain about how hard it is to get a loan.  Many of them are literally giving up on looking for properties due to the difficulties of obtaining a mortgage.

It is true, loans are more difficult to get right now then they have been in 20 years.  Yes, the amount of paper work required is over-whelming.  However, as we reach what many believe to be the bottom of the market, I believe there is a lot of money to be made real estate. Read the rest of this entry »

In our current market, many existing homeowners are looking to take advantage of the lower prices that are available.  Many homeowners are looking to upgrade their primary residence.  Upgrades can be in the form of more square footage, better location, a higher priced home, or a more functional residence.

However, many repeat home buyers are finding it difficult to sell their existing residence and/or get approved for a new loan.  Here is why… Read the rest of this entry »