Club Chaos Agents - All Things Hollish, Wacked, and Jacked

 

 

FHA loans in New Jersey with low interest rates can look very inviting.

When shopping for mortgages for FHA loans in New Jersey or any other type of loan, some ads can be very misleading. If you look at the snapshot on the left, you can see some companies listing interest rates that don't even exist. Well, they might, but do you know what kind of interest rates? Let's look at each company's ad.

 

• In regards to the first ad, it states "Today's FHA rates" in blue. Do you even know if that rate is a fixed rate or a adjustable rate? No, you don't. Yes, there are actually FHA adjustable rates in the low 3's, but a 30 year FHA fixed rate would be in the mid to high 4's. Don't get me wrong, you could get a 30 year fixed rate at 3.875%, but it would cost you around 7 to 8 points just for the interest rate itself. Besides, they are offering a rate of 2.8%.
  

• In regards to the second company, they state no social security number needed or no credit check. I could quote you an interest rate, but it wouldn't mean squat until I asked you some questions and pulled your credit report. It doesn't matter what lender you use, everyone needs your credit scores to help determine your interest rate. Besides, depending on your credit scores and what type of mortgage you are applying for, there could be pricing hits for your credit scores.

• Lastly, the third ad states that bad credit is welcomed for FHA loans. One would need to define bad credit. This is just a feel good type of statement to give some hope. Sure, there are lenders that can help with less than perfect credit on FHA loans, but it might take some massaging. Besides, look at part of the link in green, FHA.BestRates____.us  In my opinion, when companies advertise best interest rates or lowest interest rates, it's just to get the phones to ring.

 

 

Summary : Overall, consumers need to be very careful when shopping for mortgages online. Just because someone puts a very low rate out there, doesn't mean that you can get that rate.

There have been new laws for mortgage companies and banks when advertising interest rates. If a lender was going to advertise an interest rate for FHA loans, they would need to state the APR, a loan amount, the P&I, and the LTV. As we can see, none of this was done with the ads shown above. But there is a good reason why. The ads above are those from companies that generate leads that are sold to mortgage companies. So these companies don't have to follow the laws that are in place for mortgage lenders. Again, why you need to be very very careful when shopping for FHA loans online or any other type of mortgage.

 

 

 

Shopping for mortgages can be frustrating. Especially when comparing mortgages that don’t fall into the same box. Example : Comparing FHA loans to USDA loans are not in the same box per se.  Adjustable rate mortgages would be considered in the same box. And with so many questions unanswered, especially if not asked, how does one know.

 

Lately I have been reading on how people sell specific mortgages, that try to compare mortgages, yet they leave out important specifics. Or attack in their comments saying that lenders make more money on a FHA loan than a conventional loan. In my opinion, there are two important issues that aren’t mentioned when reading other posts or articles that sell one mortgage program over the other.

 

 

 

FHA Loans still allow a 6 percent seller concession. Yes, there has been talk of FHA lowering the seller concessions down to 3 percent across the board. This was first talked about in February of 2010 and was placed for public comment in July of 2010. The end result is that it still hasn’t been changed as of today, February 8th, 2011. Yes, some lenders have what are called lender-overlays, which brings me to this update.

What one needs to be careful is where they get their mortgage information from, no matter if it’s from a loan officer or a real estate agent. Just the other day I came across an answer from a realtor stating that FHA allows up to 3 percent from the seller as a seller concession, aka seller paid closing costs. As I have stated, this is 100% incorrect and can sometimes vary from lender to lender, which is called a lender overlay. This realtor claims that one of the big banks is stating that the FHA seller concession is 3 percent. Just because a big bank and or mortgage lender has this guideline, doesn’t mean that it’s the same for everyone. This realtor told me that she is just stating what her loan officer has told her.

 

 

Summary : Seller concessions for FHA loans is still 6 percent.  I highly advise that you be very careful when speaking to a realtor about mortgage specifics. You should be getting your mortgage questions answered directly from a loan officer. And even then, you still need to be careful. In the scenario above, if you were to only talk to the loan officer from this large bank, you would think that the FHA seller concession or seller paid closing costs would be the same for everyone. Keep in mind that FHA makes up the rules and guidelines and it’s up to the mortgage lenders and banks to follow them, unless they come up with their own additional guidelines which they are allowed to do. As mentioned above, this is called a lender overlay.

 

 

I am from the old school that a gentleman's handshake should be just as good as any contract. Isn't that were integrity and loyalty formulate from also?

Well, the word loyalty has always struck me kind of funny ever since I got into this business in 1992. Maybe I just hold myself to a different standard than many. We all know that phrase, "out-of-sight out-of-mind", right? If I am that good, why do many forget about you in such a short time?

 

 

 

What got me thinking about this was for two reasons.

#1 - Gerry Michaels from Active Rain had referred me to a friend of his last week. I had the pleasure of meeting Gerry at RainCamp in Philly back in November. In any case, I spoke to Michele, Gerry's referral. Michele owns her own financial services company to where they help with tax returns, tax planning, bookkeeping, payroll, etc, etc.  She has been working with a loan officer over the years who originally helped her with her mortgage. Since that times, she has referred a number of clients to this person. Well, she has two clients that need help with their mortgages and she can't seem to get a response back, after a few phone calls and e-mails.

#2 - We had a corporate meeting yesterday and the owner of my company wanted us to visit realtors at least once a week in their offices.

 

 

So here is the issue and question that weighs so heavily on my shoulders at time. Why does loyalty have to be so difficult at times?  Or like pulling teeth?

Let's look at Michele for a minute. She had the help of a loan officer who she thought did a good job. Hence why she referred him business. Not sure if he had to call her weekly, send news letters monthly, or anything else to stay in front of her.  But just for the fact that she was loyal enough and went to him first, not looking around.  Or left for the next bunch of promises made by the next loan officer wanting her business. My thought on this?  Why risk something that is already good.

Now let's look at what my boss had stated in our meeting for the new year. I get it, to cultivate new business, I do believe that you can't be out of sight. That part makes sense. But what about when you land that account or that realtor, you close a few deals for them, and they truly like working with you for several reasons. No, not just because you got the deal done.  With some of the things that many of us do on a daily basis, would you rather see my ugly face once a week, or just let me get my job done. I am not trying to sell monthly subscriptions to Newsweek or even to NAR.

 

 

My whole point.... how do you treat loyalty?  I believe if it's not broken, why try and fix it. Do you jump ship for a better promise, no matter if guaranteed or not, not knowing if it will work in your favor until after the fact? I call that a risk. What if you are client/consumer. How do you treat any of this? You went to a realtor or a loan officer that got the job done for you, in which case, you were elated, thrilled, and had a great experience. Shouldn't that person be in the back of your mind when you need to buy again, or when someone asks you for a referral. How would you want to be treated?  Remembered?  Overall, just food for thought.

 

 

 

Could one say that the sky is falling?

 

There has been a major discussion whether or not Pre-Approval letters will be like dinosaurs, extinct. It was started with this post by Marilyn Boudreaux - Pre-Approvals Disappearing? -  It was then followed by Lenn Harley's post, Calling all loan officers on Active Rain?? What are the facts here?? No Pre-Approval letters??? - After reading every comment on both posts, it sounded like some realtors just wanted to walk the plank per se. Some mentioned that Pre-Approval letters aren't worth the piece of paper that they are written on. So I wanted to set the record straight and give some insight.

 

 

 

In regards to both posts and the comments, I think some seem to be losing focus on what we should be paying attention to. When writing a blog post or comment that is of opinion, some people will read it as if it's factual or correct. This is sometimes why news is misleading or incorrect. And I read several comments by loan officers that were just wrong. Some of them are lender overlays and nothing more.

 

Some other comments to nibble on :

 

 

From a real estate agent - "I definitely require a pre approval letter - make darn sure the loan commitment is in 15 days and financing contingency in the contract is off - buyer's deposit is on the hook - sorry"

Me?  A loan commitment in 15 days? This is to include weekends? It's just not that easy anymore.   Gerry Suarez talked about these so-called 10 day closings.  I can close a loan in 10 days or less.  Also, some commitment dates be unreasonable.  What is a reasonable commitment date?

 

From a real estate agent - "I am at a loss. Sellers are still expecting "pre-approval" letters, and are not willing to go forward with a "pre-qual" which is considered useless."

Me? Here is a Call to Action to all realtors. Educate your sellers properly. Give them the facts about the real differences. Sure, there is more curb appeal when you say "Pre Approval". A good loan officer's pre qualification letter should be just as good. More later.

 

From a loan officer - "I think that defining the difference between pre-quals and pre-approvals is important.  I view a pre-qual as taking an application and getting an automated approval.  I view a pre-approval as the pre-qual plus validating income, assets and etc.  I then have another category for a pre-approval with an underwriting decision...(more was stated)"

Me? The first sentence is right on. But it sounds like this person has Pre-Approval A and B. A real pre-approval should be fully underwritten. Please read below.

 

 

 

Pre-Qualifying Letter vs Pre_approval Letter

What I want to focus on is the difference between a Pre-Qualification Letter and a Pre-Approval Letter.

 

Pre-Qualification Letter -  

The loan officer should be pulling a credit report and inquiring about income and assets. They should go a little further and ask some important basic questions such as time on the job, rental history, etc, etc.  Jeff Belonger's questions for a pre-qualification of a mortgage.

 

Pre-Approval Letter -

The same thing that was done with the pre-qual situation, but that you also take a full mortgage application and collect income and asset documentation. Not only should you be running this loan through AUS (automated underwriting system), but an underwriter should be approving this also subject to the appraisal and title. What happens is that many loan officers just run the loan through AUS and if they get an approval, they then hand out a Pre-Approval Letter. One can argue on opinion that you can stop at the AUS and not proceed with the underwriter. That if you have an underwrtier review and underwrite this, then this would be called a commitment to lend.

In my opinion, here is the major issue regarding the pre-approval with an AUS approval. What happens if the loan officer calculated income incorrectly?  Or that they missed a large deposit on the bank statements?  Or they missed child support on the pay stubs?

 

 

Summary :  A very good qualified loan officer should be able to just hand out a pre-qualification letter and the loan should still close. Here is an excellent comment by Robert Rauf on Lenn Harley's post. - Rob's comment - This is just myself, but if I am unsure of a particular borrower and I run AUS and it comes back refer, I will then go over it with my underwriter. I don't need to go through the whole approval process.

Something else that just took place more recently and why Pre-Approval Letters might not be as credible, even if an underwriter signed off on the file. Under Fannie Mae, a new credit report has to be pulled prior to closings. You don't have to do this on FHA loans.  But it has become a lender overlay with many lenders, to where they are doing this anyhow. Larry Bettag wrote about this - Don't use your credit after you apply for a loan.

 

 

Answer to Marilyn's original post - You can still offer Pre-Approval letters - Ken Cook wrote an excellent comment on Marilyn's post.  - Ken Cook's pre-approval comment -   

There was some discussion about RESPA and the new GFE rules and what Fannie Mae has said about pre approvals. First thing is that you don't need a Good Faith Estimate to give out a pre-approval letter. You can give a borrower a form that is called an 'Itemized Fee Worksheet', which is exactly the same as the old GFE, Good Faith Estimates. There are 7 trigger points that have to be met to tell a loan officer that a GFE has to be sent out by RESPA's rules. You could still give out a GFE prior to this, but the lender is held to that GFE. That is the issue surrounding GFE's.

Keep in mind - There are many lenders with their own lender overlays, which is why you are reading so many different answers from loan officers. Some loan officers think their answers are from HUD, when it's actually from their company, just trying to be extra careful.

 

 

PS.  - I received an approval from my underwriter to post on this topic - Monday dry Humor -

 

 

_____________________________________________________________________________________________________

 

                  

                                                                                                           FOLLOW ME ON FACEBOOK

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- FHA Home Loans - Mortgages -

 

Experience & Knowledge at its BEST !!!

 

 

Follow me on:

 

 

_____________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc

 

 

A lot of chatter about the First Time Homebuyers Tax Credit

 

 

Let's start with the basics about the First Time Homebuyer's Tax Credit....

•    Yes, it has helped some that might not have bought.
  

•    It has given people money after buying to help fix up their homes, pay off debt, or save for emergencies.

•    And ___________. ...  wait, I really can't think of anything else.

 

Has the Tax Credit been a mechanism that has artificially stimulated the economy?  Some will say yes and some will say no. I will be one of those yes people.

 

 

People, we are printing money at record paces that our checkbooks will never be able to pay off.  The ATM has crashed…..

 

 

 

From day one, I have been against the tax credit for the most part. I have had my reasons, several of which are starting to show now than later. Yes, it has helped home buyers and it has helped the economy some. But is the damage greater than the good that it was suppose to have done?  Yes and there are now news reports giving startling facts. Here is an excellent article from USA Today.. - Home buyer tax credit fraud called 'disturbing'   Here are 3 disturbing facts mentioned in the article....

 

 

 

 

 

 

**Costing the government $10 billion.  I don't think the government are the ones that write the checks from their own bank accounts. Shouldn't it say, this will cost the American Public $10 billion?***

 

 

 

 

 

 

***Gee, an additional $17 billion.  I thought the first time homebuyers tax credit was suppose to stimulate the economy, not weaken it. People, who pays for this?  We the tax payer.***

 

 

 

 

 

 

***Apparently our kids haven't learned much in school about fraud. Could these be are next wave of harden criminals?  And a 4 year old?  I would have to assume that a parent filed that on behalf of their child.***

 

_______________                                                                                                           _______________

 

Here is another article by Jackie Calmes with similar answers, but that she also shares some more cold facts that seem scary to me. Home tax credit audit shows abuses -

 

 

 

 

 

 

 

***Claimed the tax credit, yet didn't buy a house yet.  I wrote about this in May of 2009. Fraud Alert on the First Time Homebuyer Tax Credit - Do you chance it? - There have been some realtors that basically told me that nobody would commit fraud on this. I even had one realtor tell me that they had a woman that worked for the IRS that got her money before she bought her house. I truly respect this realtor also. But he was very protecting of his buyer, stating that she would never commit fraud because she worked for the IRS. People, I don't care who you work for, greed will get the best of you at times.***

 

 

 

 

 

 

 

 

***Now the government is saying that we still have a weakness in the housing market.  Yet they will go on and get the media to state that the recession is over?  Jim Crawford brought this to our attention in his blog post, I'm so happy the recession is over! Aren't you? - I am tired of misinformation and politics. Will we ever get the truth?  People, I think we don't need to hear it, because the writing is on the wall. Have we forgotten how to read?  Or do we need people to tell us what we want to hear?  hhhhmmmm***

 

 

 

 

 

 

 

 

***Imagine that, a politician needing to be re-elected again and possible trying to push something that might actually hurt our economy instead of helping it.  now, this is based on my opinion, but I didn't see this tax credit getting us out of the mess or even truly helping the housing market for the most part.***

 

 

 

Conclusion : What crawls under my skin is not only do the lawmakers on Capital Hill want to extend the Tax Credit, but that they want to increase it to $15,000.  Why?  What is really wrong with $8,000??? And why can't we go back to the re-payment schedule that was applied in the very first tax credit, when the $7,500 first time homebuyers tax credit was introduced.  Seriously, what is so wrong with this? Free is not free.  One way or another, we will be paying for this anyhow.  Some of you scream about people having skin in the game, when buying a home.  Yet some of those same people don't seem to be screaming about having skin in paying back the tax credit.

What about those politicians that just want to sign bills and pass them, just for the sake of getting votes for when re-election time comes around. Yet these same people don't take the time to do proper studies to see if this is actually working as planned. Is this all smoke and mirrors for the most part?  Do many of you actually pay attention to this? Or do we just go along with the crowd, because it seems better than what we currently have?  We need to think about this and not just roll over in our graves, which could be sooner than later. What say thee?

 

 

 

 

                    

                                                                                               FOLLOW ME ON FACEBOOK

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

 

_________________________________________________________________________________________

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 © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc