Posts Tagged ‘Tips to getting a good mortgage’

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Applying for a Mortgage…The Personal Invasion Process?

November 2nd, 2009

When I (Luke) first got into the mortgage business over 6 years ago, the world was a very different place.  The government and financial institutions were operating under the idea that everyone in America should own a home.

The first company I worked for specialized in Stated Income Stated Asset mortgages.  While this sounds risky, these loans were only given to people with a great credit score and credit history and a verifiable income source.

The next company I worked for specialized in subprime loans.  These were loans designed for people with less that stellar credit and these types of loans were designed to be a short term fix.  In fact, many people who received these loans would have lost their home at that time, if it were not for these subprime loans.

The idea was that real estate was always a safe investment for banks because property values always went up. If the borrower defaults (went into foreclosure) the lender would get the property back and be able to sell it to get most of their money back.  But nobody really thought about what would happen if too many homes went into foreclosure and property values started to drop.  Well, as we all know, that worst case scenario did happen and as a result, getting a new mortgage in today’s market can be very difficult.  This month’s article is going to give you some tips about how to make getting a new mortgage as painless as possible.

The first and most important thing to remember in today’s mortgage/real estate market is that YOU MUST DOCUMENT YOUR INCOME! There are no more stated income loans.  For self-employed borrowers such as myself, this can often pose a problem.  The best advice I can give to all of you self-employed people is to have a professional mortgage broker review your file to see if you can document enough income to qualify.

The second tip that can make getting a mortgage go much quicker is to Collect All Your Documents Ahead of Time.  Here is a short list of documents that are required on most loans today: 2 years tax returns including W-2s, 30 days of Paystubs for all jobs, 2 months of banks statement for all bank accounts (including retirement accounts), Copy of drivers license and social security card.  These are just to start.  Your mortgage broker professional could have a list of additional items for you to collect.  It is very important to get the requested documents back to your mortgage broker ASAP.

The final tip that I would like to give you about getting a new mortgage is Have Patience.  The mortgage process is not longer a streamlined process.  Lenders are all asking for more and more documentation.  As long as you are working with a Professional Mortgage Broker, they will guide you as quickly and painlessly as they can through the mortgage process.

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On Your Marks, Get Set…Wait!

September 24th, 2009

Anybody that has tried to get anything done with their mortgage recently understands that things have been moving a little slow.  Well good news, the politicians in all their infinite wisdom decided that you the consumer need EVEN MORE TIME to make a proper decision about your mortgage.  The fact that on average a mortgage takes 3-4 weeks to complete and that after you sign documents on a refinance; you still have an additional 3 days to decide whether or not you want the new loan.

The Home Economic Recovery Act (See the name even sounds good) or HERA as it is also known, went into effect on July 30, 2009.  On average we are expecting that HERA will add 5 to 10 days for your new mortgage to close.  What that really means is that now instead of being able to lock rates for 30 days, many loans will have to be locked now for 45 days.  The longer the lock, the more it costs.

Now I understand what the intention behind this new law was to try and protect consumers but they are going about it the wrong way.  There are enough laws on the book.  What would be more helpful to consumers would be to enforce the existing laws.  All the laws in the world mean nothing if they are not enforced.

Something that would make more sense is giving the consumer a way to file a complaint if they feel they were tricked or lied to.  If the Department of Real Estate received enough complaints, then they could investigate a particular broker’s business, instead of changing the rules to punish everyone.  Because as I have stated before, those people who obey the existing laws will obey the new laws and those who don’t obey the existing laws, will not obey the new ones either.  They will just figure out a way around them.

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Fewer Rules, More Common Sense

September 24th, 2009

The HVCC as mentioned above is just another example of good intentions gone bad.  One of the biggest problems facing our country right now is the flood of new laws being put into place.  Because of the state of the economy and incorrect opinions about what got us to this place, many politicians are creating laws based more on what they think will get them more votes instead of looking taking the time to really understand the problem so they can properly fix it.

Here is the inherent problem with trying to solve the problems in our country with more rules.  Every time you create a new law, you create more loopholes for people to get around the laws.  All the laws really do is increase the cost of doing business for those professionals who continue to operate in a legal and ethical way already.  Someone who is currently breaking the law, will just end up breaking the new laws.

What we really need in this country is more common sense.  Instead of creating new laws, why don’t we just give more power to those who have authority to enforce the laws we already have.  Before the HVCC was put into place, it was against the law for any lender or mortgage broker to influence the value of an appraisal.  The real problem was that if an appraiser felt that he or she was being pressured, they didn’t have a strong enough system put in place to give them any power to stand up to that lender or broker.

One more thing; if a law is created and at some point it becomes obvious that it is a bad law, let’s just get rid of it.  We don’t need more laws to get around the bad one.

As always, if you would like to see what it feels like to work with a mortgage broker that can bring a little sanity to an insane world, give The Kunselman Team a call.

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What is the HVCC?

September 24th, 2009

HVCC is the acronym for Home Valuation Code of Conduct.  While this is a law that pertains to how both mortgage brokers and lenders run their business, HVCC directly affects you, the consumer, by driving up costs for getting a new mortgage.

The HVCC is a law that was created with the intention of making sure that appraisers were not being influenced by lenders or mortgage brokers.  This law came about because the New York State Attorney General, Andrew M. Cuomo sued Fannie Mae and Freddie Mac (the two larges purchasers of mortgages) saying that they did not control the appraisal standards enough on loans they were purchasing.  As a result of the lawsuit all loans that would be purchased by Fannie Mae and Freddie Mac after May 1st must have the appraisal ordered through an appraisal management company or AMC.  (Just a note, these AMCs are not regulated in any way.)

The whole idea behind the HVCC is the government is trying to prevent lenders/brokers and appraisers from conspiring together on mortgage transactions, but here is what we have seen HVCC do so far:

  1. Average cost of an appraisal has gone up.
  2. Appraisers are getting paid substantially less per appraisal which is causing a mass exodus of good appraisers from the industry.
  3. Many appraisals are being done be inexperienced appraisers who don’t even know the area they are appraising.
  4. Many appraisals are coming in undervalue, not because the value is not there, but because the appraiser did a poor job on the appraisal.
  5. Turn around times on appraisals have at least doubled, so this adds lots of time to the loan process.
  6. If there is a problem with the appraisal, no one except the AMC can talk to the appraiser about it.
  7. Because these AMC companies are nothing but order takers, they do not have the ability to communicate challenges to the appraisal so changes are very unlikely.
  8. HVCC has done nothing but cost consumers more time and money and has not made the mortgage industry any safer.

There is a light of hope here though.  On June 26th, H.R. 3044 was introduced into legislation.  H.R. 3044 calls for an 18 month moratorium on HVCC.  The hope would be that after the 18 months, HVCC will be thrown out all together or at least changed in such a way that it achieves what it intended too.

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Just don’t fall for it?

September 24th, 2009

We have all heard the saying, “If it sounds too good to be true, it probably is”, yet we have all fallen for someone who promised us the world and only delivered us disappointment. In the last month or so, we at The Kunselman Team have started to hear a lot of stories about people who were promised great things from some mortgage broker that they didn’t really know and surprise surprise, the broker did not deliver on their promise.  This is not that uncommon in this market because many mortgage brokers are desperate for business and will tell people anything to get a loan.   We had a client call us last week because they had decided to work with a broker who promised to close their loan in two weeks when we said it would take about 30 days.  The loan didn’t close in two weeks and it still hasn’t closed.

The Kunselman Team has a much better philosophy.  We believe in under promising and over delivering.  While many brokers will leave 3rd party fees of their Good Faith Estimates to make it look like they are charging less, The Kunselman Team puts every fee that can come up so that there are no surprises except maybe that your are getting back more money than expected.  We are also realistic about the time it will take to close your loan.  Loans just take longer to do now than they did in the past.  Lenders are looking at every detail much more closely than they have in the past and that takes time.  If you are working with someone who promises to close your loan in two weeks, get it in writing and make sure you get something if they don’t deliver on their promise.

As always, if you would like to work with the best in the industry, give The Kunselman Team a call so we can help you with all your mortgage needs.

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What Can the Stimulus Package Do for Me?

September 24th, 2009

Every day when you turn on the TV you are bound to hear someone talking about the “Stimulus Package” and how it supposed to help home owners buy homes or refinance their existing mortgages but few people explain how this applies to the average person in terms everyone can understand.  Today I want to talk about two specific programs, the “First Time Home Buyers Tax Credit” and the DU Refinance+.  These are two of the better parts of the “Stimulus Package” and I would like to explain how these could help you or someone else you know, like and trust.

The “First Time Home Buyers Tax Credit” in very simple terms is a rebate you get from the government for buying a home.  Now this rebate does come with a few restrictions.   First, you must be a “First Time Home Buyer”.  That means you cannot have owned a property in the last 3 years, so just because you may have owned a home in the past doesn’t mean you can’t qualify for this credit.  Second, if you purchase a home for $80K or more you will get the full tax credit of $8,000; if you purchase a home for less than $80K, you will receive 10% of the purchase price in a tax credit.  In addition to the previous two restrictions there are some income restriction that you will want to talk to you tax advisor about.  But here is the beauty part of this tax credit too.  The tax credit is real money in your pocket.  This is not one of those programs where they will reduce your taxable income by $8,000 so you pay fewer taxes.  If you are scheduled to get a refund of $500 on your taxes, you will get a refund of $8,500 instead.  Now since most of you have probably already filed you 2008 tax returns you have two options when to collect this credit.  You can wait until you file you 2009 tax returns and you will get it then or you can amend your 2008 tax returns and get it this year.

If you have been considering buying a home, now is the perfect time.  Longmont’s real estate market has been stabilizing well and the state as a whole has actually seen its first decrease in foreclosures since they started monitoring them back in 2003.  But you cannot wait forever.  If you want to qualify for the “First Time Home Buyers Tax Credit” you must purchase a home before December 1st, 2009.

The DU Refinance+ program is designed for those who currently own a home and would like to refinance to a low interest rate but might not be able to because their property values have declined.  There are a lot of restrictions to this program so I will cover some of the big ones but each loan is looked at case by case.  First, to qualify for this program, your current first mortgage must have Fannie Mae as its servicer.  The easiest way to find out if your mortgage is owned by Fannie Mae is to call The Kunselman Team and we can look it up for you.  (Please note that even though you don’t make your mortgage payments to Fannie Mae, that doesn’t mean your loan is not owned by them.)  If Fannie Mae owns your mortgage, the second question is “Does your first mortgage currently or in the past had mortgage insurance on it?”  If the mortgage had mortgage insurance on it at any point, you do not qualify, but if your first mortgage is 80% of you homes value or less you may qualify.

This program is particularly helpful for those who have a first and second mortgage on their home.  Many people with first and second mortgage currently owe more than their home is worth.  By current lending standards, these people would not qualify for a refinance but with the DU Refinance+ Program, as long as their first mortgage is not more than 105% of their homes value, they may be able to qualify for this refinance to lower their monthly payments.  This is not a cash out refinance!  You can only refinance your existing mortgage and the loan closing costs.  If you have a second mortgage, that company must agree to the terms of the new loan but since we are usually bettering your situation, many are being pretty cooperative.

If you or someone you know, like and trust would like to see he or she qualifies for either of these fantastic programs, please contact Luke at Luke@TheKunselmanTeam.com or Shelley at Shelley@TheKunselmanTeam.com.

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Posted in Know Your Mortgage, Mortgage Industry, Real Estate Industry, Understanding Your Mortgage

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