Many of my clients are very tech savvy with the Googler, understand the value of comparison shopping, and obviously want to get a second opinion on a decision as important as their mortgage.

Being informed and not being taken advantage of during the loan process is very important.  Getting 4,5, or 10 opinions and quotes on your mortgage is time consuming, will do little to actually save you money, and can complicate the situation.  Additionally, rates change daily and sometimes multiple times in a day.  If you are like most of my clients and do your “rate shopping” throughout the week, you are not getting a fair evaluation of rates between various lenders.  You may feel that the 3rd bank that you contacted during your week long search had the best rate to offer.  The truth may be that bank #3 was the bank you called on a day that rates dropped a bit.  Unless all rates are obtained from all banks you are shopping on the same day… you are not making a fair comparison.  

The dirty little secret is that in today’s mortgage markets, the rates from bank ‘A’, to Credit Union  ’B', to broker ‘C’ are going to be virtually identical.  The days of niche products and pricing, bank portfolio lending, and hybrid interest only products are a thing of the past.

Two years ago it was important to do as much loan shopping as possible.  Every bank, loan broker, and credit union had their own speciality product.  If you searched long enough you may have been able to find a rate 1% lower than the competition, or loan terms that were much more favorable to your individual scenario.

However, here and now in late 2009, there are basically two mortgage products available to the average consumer… a 30 year fixed mortgage, and a 5 year interest only mortgage.

Each bank has a different method for advertising their rates on these two products.  Some lenders, like myself,  quote our rates with no points or hidden fees.  Many banks, and an overwhelming majority of Brokers, quote their rates with 1% point built into the transaction (a point is a fee charged up front to get you a lower rate, and designed so that the bank or broker can advertise a more appealing loan).  Some lenders, being aware that consumers are becoming more informed, advertise their ‘low’ rates with ‘no’ points - but charge you thousands of dollars of junk fees on the back end to substitute for the 1% point they should have quoted up front.

It’s because of this manipulation of “points”, “fees”, and quoting techniques that Lender “A” can make their rate appear so much more attractive (or lower) than Lender “B”.

Just recently I lost two deals to other lenders who I know, for a fact, were lying to the client.  If the going rate at no points for a 30 year fixed rate mortgage is at 5.50% with Bank ‘A’, there is NO chance you can get that same mortgage, at no points and the same fee structure at Bank ‘B’ across the street for 4.75%. 

30 year fixed rate mortgages are based on publicly traded mortgage backed securities and demand for treasury instruments.  At this point in time, all banks and brokers are working from the same pool of money in the secondary mortgage markets.  In my example above, there is no way Lender “B” could afford to extend the significantly lower rate of 4.75% without charging a “point” (1% of the loan amount in fees), or some other garbage fees used to obtain this lower rate.

I have seen it to many times to count where a client gets wrapped up on finding some amazing deal.  An unethical lender promises them a rate that cannot be delivered or hides the fees associated with the obtaining this lower rate.  The consumer signs on to do business with the unethical lender and usually finds out that they have been lied to when it is to late in the purchase transaction to start over with another lender.  Sometimes the presentation from the lender of the available rate and fees is simply fraud.  However, many times it is a matter of consumers only hearing what they want to. 

Many consumers get fixated on the rate and jump to apply with the lender who has the lowest “rate”.  What that consumer has failed to do is verify the cost of obtaining that rate.  Then, at the closing table, the borrower is shocked and appalled when they realize their lender has charged them several thousand dollars in points or fees in order to obtain the low rate they fell in love with.

The morals of the story are that a well informed consumer is great, and over-zealous consumer is dangerous.  Make sure to compare all three components of the mortgage before you choose – compare Rates, Points, and Fees.  Most importantly, you can shop for rates until you are blue in the face…  all you really have to do is pick a lender you trust that came with good references and the rate will take care of itself.

As always, if you need information on starting a new loan for the purchase or refinance of your home, contact me at trustyourlender@gmail.com

Many of my mortgage clients who are self employed simply cannot qualify for a mortgage in our current loan environment.

Decades ago, stated income and low documentation loans were created for self employed buyers who were legitimately earning high wages and had great assets; but whom also took advantage of legal tax deductions, business write-offs, and complicated real-estate investment trusts [which produced positive income while also generating tax "losses"].

As we know, over the years these programs were bastardized and created a “low-doc” environment in which anyone with a decent credit score could get virtually any purchase loan or refinance.  Since the real estate meltdown which started in 2007…  banks are showing no interest in ever again providing the stated income lending programs that self employed buyers have come to count on.

Here is an explanation of the problem, and what self employed borrowers can do to find out if they are eligible for a loan. Read the rest of this entry »

In the last few weeks I’ve seen several deals fall apart at the last minute due to in-properly documented “gift funds”.

If a buyer is going to receive gift funds in order to cover their down payment, closing costs, or underwriter required reserves, these are a few points to remember: Read the rest of this entry »

This morning I was on a conference call with the CFO, Strategic Planning Manager, and Sales Manager of a major bank.

Several items were discussed which lead me to believe that it is going to get exceedingly difficult over the next 6 months for houses in certain price ranges to sell. Read the rest of this entry »

I subscribe to a service run by Barry Habib called Mortgage Market Guide.

As part of this service- I get daily emails, phone calls, and web-blasts the update me on changing market conditions affecting bond prices.  These 10 year treasuries and the bond market dictate what mortgage rates will be set at.

Barry and his team have built a very successful business around keeping mortgage providers up to date with new information that may affect mortgage rates.  I particullarly enjoy getting a phone call from his ‘800′ number that advises me rates may be going up.  It generally gives me about 30 minutes to lock in loans and review rates with my clients prior to the banks increasing rates.

For the average consumer, this service would be a waste of time and money… for lending professionals, this service is a must.

As always, if you need information on starting a new loan for the purchase or refinance of your home, contact me at  TrustYourLender@gmail.com

Paying points is a way to accomplish one of two things… buy down your interest rate and save yourself money on your monthly payment, or pad the pockets of the bank, mortgage broker, or loan originator you are working with.

Obviously you only want to pay points if it reduces your interest rate, and you want to avoid the latter at all costs.

Normally speaking, the cost of ‘buying’ points, versus your monthly savings on the reduced rate, takes about 3 years to recover.

Recently I did a loan for a young couple who had just had their first child.  They bought a large house in Los Angeles that they knew they would be in for years.  The house was big enough for the family to grow, and they were 100% comfortable with staying in this house and California for the long haul.  Due to their time horizon, they paid 1.50% points up front to get a lower rate.  This was a fee of approximately $9,000 up front.

Guess what?  Life happens.  A family member of theirs recently got sick and they have to move back east as soon as possible.  They are frantically working to sell their house after only enjoying the lower payment for 6 month.  In the end, a majority of that $9,000 up front fee will be wasted.

This is just one of the hundreds of reasons not to pay points.  Stuff happens, refinance opportunities come along, loans get paid off, houses get sold way before the original expectations.

For all these reasons, I always recommend my clients pay as little as possible in up front fees in order to obtain a mortgage.

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 »

One of the challenges I face is the perception  that I occasionally have below average follow-up skills as a loan originator.  Missed phone calls from clients, and the occasional delay in returning those calls frustrate some of my clients and referral sources.  I understand how this can be frustrating.

Fortunately, for my clients, this is a just a perception and not a reality. Read the rest of this entry »

I recently saw an advertisement from a local Realtor stating that she could close any and all short sale transactions in a 30 day window.  This agent had become the self proclaimed expert of the short-sale transaction and was trying to sell herself by setting unrealistic expectation.  Throughout her community  she was trying to spread the word that she could close any short sale in 30 days or less.

Any Realtor, seller, or buyer who has worked through a short sale transaction knows this guarentee is absolutely ridiculous. 

As a real-estate purchasing industry (agents, loan originators, escrow officers, and appraisers) we all need to more properly manage our clients expectations. Read the rest of this entry »

I’m constantly getting questions about the $8,000 first time home buyers credit which is available through 2009.

Although many changes to this program have been proposed, the original out-line from February of 2009 still holds true.

Money.com (hosted by CNN), did the best job of outlining to whom this program would be available to. Read the rest of this entry »

One of the agents I work with put it best today… loan advertising should be about the process, NOT the rate.

So many lenders, spearheaded by online giants like DiTech, advertise mortgages soley by their rate.  However, in today’s market, that’s only part of the story. 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 »

With every loan approval comes a list of conditions from the underwriter that must be satisfied prior to the bank sending out the loan documents.  Different lenders call these items by different names: approval conditions, doc conditions, closing conditions, or borrower conditions are all common terms.

Satisfying these conditions can be tricky and frustrating for both the loan originator (me), and the client (you). Read the rest of this entry »

Attached is a great story published today in the Los Angeles Times about the perceptions of the Los Angeles real-estate market versus the reality.  As always, real estate is all about location, location, location.  Making an offer 30% below the list price just isn’t going to work in the more desirable areas.  One way you can distinguish yourself from the 10 other offers that may be coming in on the property you want is to ensure you are fully approved with a notable lender, not just pre-qualifed with a generic form letter.   Read the rest of this entry »

Regardless of what side of the political spectrum you fall on, regardless of how you feel about capitalism, bail-outs, the current President or the Ex-President; here is a bill that truly would have helped out troubled homeowners.

With billions being handed out by the governmnent, there should have been a way to get this bill passed.  The failure of this bill is in direct contradiciton of the new President and the new Congress’ promise to help Main Street instead of Wall Street… and of course, this story was buried in the back of the LA and NY Times.

Read the rest of this entry »