Industry Ethics
When it comes to ethics and service you will be hard pressed to find someone who tries harder to provide you accurate figures and communicate properly on your loan. I take honesty and ethical business practices very seriously, so I want to make sure you are comfortable and educated with the terms at all times. When I prepare a Good Faith Estimate I try to provide you with an accurate but safe estimation of what to expect at closing. I make sure you are aware of items and important consumer details that some companies forget to outline with you. I want to make sure there are no surprises at the closing table and your experience is a pleasant one. Loan Processing Timeframes
On a purchase loan it really depends... Underwriting and the credit markets are very unpredictable so clients need to be patient. It hinges on the real estate agent, house, borrower, program and time of the month. Normally, I can have a signed purchase agreement to the closing table in about 3 weeks if it is a Conventional Loan. Most Government loans (VA) will take about 4 weeks. On a refinance loan it can close in as quick as 17 days to as long as 4 weeks and it really depends on the condition of title, credit history, underwriting timeframe and type of refinance. Closing Costs
The majority of Private Portfolio clients have an option to have No Closing Costs or they are only responsible for paying actual 3rd party costs. * Some minor loan evaluations and program adjustments may apply on a case-by-case basis. The relationships I have with underwriters and service providers are very unique, therefore they understand how I price your loan and the type of clientele I represent. Normally, they are more willing to extend courtesies to me to help me make my clients happy. Ultimately, I'm a firm believer in "good karma out brings good karma back"...so I do my best to provide my clients a fantastic program.
Underwriting and Interest Rates
Underwriters essentially look at three different things when reviewing a loan... Typically, on a purchase loan, they look at Income, Down Payment and Credit. On a refinance loan they will look at Income, Equity and Credit. The underwriters will take those basic lending foundations and apply them to program guidelines and generate underwriting stipulations from there. Interest rates will vary based on which program is being used for the borrower as well as market conditions, loan to value, credit score, etc. With the recent developments in the credit market other adjustments to rate and programs have started to surface. In mortgage lending most underwriters and guidelines focus on the middle credit score reported by all three credit bureaus. Each credit bureau will provide the borrower a score and the middle score is often used as the qualifying score which drive many of the product guidelines. The score on the credit report is how your credit is graded. Credit grades differ from conventional products to sub-prime products and the higher the score the more lending options a borrower may have available. The following are examples of how I view credit grades: 700 - 850 = Credit Grade A to A+ 660 - 699 = Credit Grade B to B+ 600 - 659 = Credit Grade C to C+ 580 - 599 = Credit Grade D to C- 570 - 579 = Credit Grade D- Debt ratio is a term used by the industry that helps figure out if a borrower can qualify with their income while meeting all their other financial obligations. Debt ratio is very important and basically means "how much money is coming in and how much is going out". They add up your monthly obligations such as mortgage, auto, credit cards, child support, student loans, etc. The total of the monthly obligations is then divided into the borrower's gross earnings per month to establish a debt ratio percentage. This is a key element in underwriting and a sign of what the program guidelines feel you can afford for underwriting purposes. In the end, this is only a tool for the underwriter to use and borrowers should decide what they can afford by using net earnings (take home pay) and a realistic view of how it will impact their monthly budget and checkbook. This is very important to remember!!! We structure loan terms based on your needs and future goals. The most popular is the 30-year term with most homeowners to keep a low monthly payment. In many cases a refinance loan adds a lot of value to shorten the initial term to an odd amount of years to reduce / cut off the amount of interest to be paid over the life of the loan. - 7 - 10 Year Terms
- 11 - 15 Year Terms
- 16 - 20 Year Terms
- 21 - 25 Year Terms
- 26 - 30 Year Terms
- 40 Year Term
Required Client Documents
If you are doing a traditional loan application for a purchase or refinance that will be reviewing income, down payment / equity, and credit you will be asked to provide the following documentation. In some cases, reduced documentation may be accepted for some borrowers based on an initial underwriting review and finding. Standard Purchase Loan Copy of Drivers License 2007 & 2008 Federal Tax Returns + All Schedules 2007 & 2008 W-2's / 1099's 2 Recent Pay Stubs - ( showing YTD earnings ) 2 Months Bank Statements - ( All pages ) Recent 401K / IRA Statements - ( All pages ) Real Estate Agent Contact Information Signed Purchase Agreement - ( Purchase Loans ) Copy of Earnest Money Check - ( If applies ) Standard Refinance Loan Copy of Drivers License 2007 & 2008 Federal Tax Returns + All Schedules 2007 & 2008 W-2's / 1099's 2 Recent Pay Stubs - ( showing YTD earnings ) 2 Months Bank Statements - ( All pages ) Recent 401K / IRA Statements - ( All pages ) Name & Number of Insurance Agent Copy of Property Tax Bill / or Escrow Analysis Statement Additional Documentation for Special Circumstances Bankruptcy Papers ( List of Creditors ) Bankruptcy Discharge Papers Proof of any Collections / or Judgments are Paid in Full Entire Divorce Decree
Additional Documentation for Self-Employed Past 2 Years Business Federal Tax Returns + All Schedules Year-To-Date Profit & Loss Statement (P&L) Copy of 2 Year Business License / or 2 Year CPA Letter
Mortgage Lending Programs Lending Avenues to Explore
There are many different lenders, banks, and niche market investors out there. In many cases, there are lenders that are great for some products and not as attractive on other products. Not all lenders and banks underwrite and lend using the same guidelines but most go through the same channels to use the money they lend. Although multiple lenders may seem like a lot of different avenues to pursue for one loan, my experience has helped me streamline my search for programs best suited for my clients. Typically, I look for lenders that offer good products with good rates, underwrite efficiently, communicate effectively, and service the loan professionally.
There are a vast assortment of low (3% - 5%) down payment financing options available in the market. Most of these programs are driven by credit score, payment history and debt ratio. Depending on the lender, some programs are more flexible with credit score then others and some may have different rates than others. Ultimately it will all boil down to market conditions and the risk level within the loan file.
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Interest Only programs have become very popular in the past 36 months. This is especially true with clients who have purchased larger homes or carry a loan amount of $225,000 or more. This product allows the borrower to have an interest-only payment on their mortgage for a set period of years (3, 5, 7, 10, 30) and the luxury of resting on a lower payment. After the interest-only period is over, the existing loan balance is amortized over the remaining years and will switch to a higher payment that will include principle and interest. This style of loan is perfect for someone who has contributed a large down payment or carries a loan amount of $225,000 or greater and lives in a strong real estate market. Most clients exercise the option to pay more towards the principle per month or use the extra money per month on investments, pay off bills, etc. This is certainly a creative program for a borrower who is financially disciplined and who understands the product well. Combo loans are often referred to as the 80-10-10 or 80-15-5 combo. These loans are conventionally underwritten programs that are intended to break a loan into two different mortgages. The purpose of this is to avoid private mortgage insurance (PMI) and to carry a shorter term of a smaller portion of money on the second mortgage. These products have become very popular but are now requiring borrowers to meet higher underwriting standards that they once requested. Second mortgages are becoming more and more difficult to find on this product. Example: 80-15-5 Total Purchase Price $200,000 1st Mortgage Loan Amount = $160,000 80% of Purchase Price 2nd Mortgage Loan Amount = $ 30,000 15% of Purchase Price Down Payment = $ 10,000 5% of Purchase Price VA Loan products are for qualified Veterans of the United States Military. These products are useful in both buying a home with 100% financing or refinancing a current VA loan at a lower rate. For clients who wish to refinance a current VA loan there is a product available called a Streamline which is a simple rate reduction and allows the borrower to provide reduced documentation. The major qualifier for streamlines is that we must be able to save you at least $50 per month, drop your rate by typically 1/2% or more, and you must have no 30-day late payments on a mortgage in the past 12 months. Depending on the structure of the refinance there could be other underwriting requirements. Please call for more details. Jumbo Loans and Super Jumbo ( to 5 Million )
Over the years, Jumbo loans have become somewhat of a specialty for us and we have become very comfortable working hand-in-hand with many of our client's accountants to design these properly. Through experience we have enlisted an array of lenders that cater to this niche and we have packaged many loan programs for our clientele by utilzing these products. Typically, these loans are structured into combo loans, interest-only loans, ARM products, as well as some off-market avenues that may include a single loan. Jumbo loans and Super Jumbo to 5 million carry a slightly higher rate than a standard conventional loan amount, but the lending foundations are basically the same with regard to credit scores and income. For more details about our JUMBO and SUPER JUMBO products - please call me directly. The sub-prime market is pretty much gone for now. These products were once (in some cases) very useful for borrowers who had a good plan and were properly educated on how they work. Sub-prime was never a product that we typically focused on offering. Due to current market conditions most programs and lenders are gone or very limited. Lines of Credit are a revolving account that is attached to the property as a second mortgage. Typically referred to as a Home Equity Line of Credit ( HELOC ) these products provide an open reserve amount of cash that can be used for just about anything. Consolidating debt, home improvements, college costs, etc. Depending on the credit scores of the borrower the line may be offered for up to 90% of the equity in the home. Interest rates are normally tied to the prime rate and can adjust accordingly and are typically based on how much of the equity in your home you borrow as well as credit scoring. There are, in some cases, a "rate-lock" option available with some lenders and many will provide you with a checkbook and credit card in order to access your available funds. The line payments are normally interest-only and the line can be drawn up and paid down to zero without penalty. |
