Research mortgage professionals to get the best loan and service.

As Arizona Media insider Catherine Reagor at The Arizona Republic puts it, the mortgage industry in the past has “duped you.”  You were deceived Mr. Consumer for having an unlicensed loan officer do your mortgage loan, collect higher fees and force you into the worst loan products possible.  So I guess until our industry is fully licensed next year, no one will be able to get a “fair mortgage.”  The problem with this information is the mortgage professionals left in our industry today are the ones that played by the rules to begin with.  Now we have to face the music for the flaws of others who were looking at the mighty dollar and not what was best for their customers.

In my opinion, it goes back to doing some research before you choose a mortgage lender.  When we need our taxes done we seek out the brightest and best CPA’s, when we are sick we visit the most specialized and best doctors.  For some reason, when the consumer needed a mortgage to buy the biggest investment in their life, they sought out the guy who had a billboard advertising the lowest rate in town.  I’m not sure about you, but I was taught at an early that “you get what you pay for.”

It’s simple advice: seek out the best and the brightest.  True mortgage professionals left selling loans did not get into this business to set our clients up for failure.  Why would I want to put a client into a loan that would cause them to lose their home?  You see, true mortgage professionals want the referral business of their clients and are looking out for their best interest.

At the end of the day, consumers will still buy homes and homeowners will need a mortgage.  You will need a mortgage lender to provide this service.  A piece of paper saying I can pass a test does not make me a reputable loan officer; having a reputation that is backed up from prior clients and business partners does.

The days of funding a loan on an average credit score are long gone.  Today even an FHA loan requires a minimum score of 620.  I’ve highlighted some tips to help you be more aware of your credit and some ways to improve your score:

• DON’T BE LATE!:  One of the worst things you can do is being late on a payment.  Not only are you monetarily penalized, but timeliness amounts to 35% of your credit score.  Set reminders for yourself and if you happen to miss a payment, pay it as soon as possible.  Repeat after me… I will not be late on credit card payments!
• Know your credit score: You can get a free credit report each year (www.annualcreditreport.com) so take advantage of this service.  You will also want to know what lenders see when they pull your credit, so spend the extra $15.95 to learn what your FICO score is.
• Search for errors:  Statistics show that 70% of credit reports show serious mistakes.  That’s a huge number!  When you get your FICO score, search for any mistakes and get those fixed.  The Fair Credit Reporting Act requires credit reporting agencies to fix those mistakes, but you have to take the initiative to make that happen.
• Debt vs. Income Ratio:  Amounting to 30% of your score is how much you owe versus how much credit has been extended to you.  If you owe on credit cards, keep the level under at least 20% (preferably 0-10%) for each card.  The more you owe, the more your credit will be hit.  Are you already over 20%?  Pay down your debt as soon as you are able to.  Without your debts under control, financing a home will be extremely difficult, if not impossible.
• Don’t cancel cards:  15% of your score is based on the length of your credit history.  If you have an old card you don’t use anymore, consider moving a recurring charge (not a high amount!) to these cards so they stay active.  This will also prevent getting a card cancelled on you which has been happening more frequent lately.

There are other factors included that you can’t really affect.  They involve a mix of what types of credit you have (such as credit cards, mortgages and car loans) and new credit.  When you add more finances to manage, it can sometimes have a negative impact on your credit.  Focus on what you CAN change and good luck!

I’ll be honest; the entire process of purchasing a home is not fun.  Having your teeth pulled by a dentist may be more comfortable than getting a mortgage approval these days.  When I am asked about my system, I make it clear the more that is accomplished early on will make for a smoother closing.   The system from the beginning to the end is time intensive.  I will walk through some of these steps:

1. You hire a “team,” meaning the right players helping make the outcome a positive one.  First, you hire a lender and see how much you can get approved for.  Then you hire a real estate agent to help you find a dream home.  This is just the beginning.  By the time the process is done you have hired many others including an appraiser, home inspector, termite guy and title company.

2. Get a plan (with your lender and agent).  In my experience, I have found that having a plan upfront will make the last days of closing run smoother.  Preparing early helps reduce stress levels on all parties involved with the transaction.

3.  Get a pre-approved loan.  This process can range from a couple hours to days and weeks depending on your specific challenges.  If a real estate agent tells you he can have a pre-approval by a lender in minutes, that is not the case in this market.  A pre-approval in my book is determined when;

• I have a complete and fully reviewed mortgage application on file.
• An automated approval process has been run and come back approved.
• I have received all supporting documentation to meet loan guidelines.

Once I have all of this done, your loan is fully pre-approved and I can issue a pre-approval letter or loan status report.  I can then inform your real estate agent that he or she can take you house hunting in your pre-approved range.

4.  Start house hunting.  This process could take hours, days, weeks or months depending on your specific needs, wants and requirements.  Once the real estate agent has an ACCEPTED CONTRACT is when the clock starts ticking.

5.  Signed contract.  This means that the accepted contract is signed by all parties involved in the transaction.  All parties include the buyer, seller and agents.  If you have a verbal acceptance but it will take three additional weeks to receive from the bank, this doesn’t count!  Your final approved loan starts with a FULLY ACCEPTED CONTRACT.

6.  Process, underwrite and close your loan.  Right now my turn times for these steps is in 30 days or less on FHA, VA or conventional financing.  Sometimes we can speed up that process, but be prepared for it to take that long.

Knowing and understanding the process of a mortgage approval can prepare you for your own experience.  It doesn’t have to be as painful as a visit to the dentist, all it takes is a little (or a lot) of patience.  Good luck!

Imagine yourself in your dream home, you’ve got everything you wanted including the white picket fence.  Now take a step back…how did you get there?  I will tell you one way of never getting into your dream home; bad credit.  Period.  The end.  If you have poor credit, you’ll never be able to carry out your dream of homeownership.  Some of you may be thinking that you have bad credit and you’ll never own a home.   Wrong.  There are steps you can take to make homeownership a reality.

So you’ve been behind on payments, creditors are reporting wrong.  I’ve heard them all.  Whatever it may be, you think the dream of homeownership has passed you by.  What you may not know is several companies exist to help repair your credit.  Some have charges up front and some charge a monthly fee, it just depends on the company.  You may think you cannot afford credit repair, but I say you can’t afford NOT to use a credit repair company.

It’s simple.  If you don’t have good credit, you can’t get your own home.  Why not take advantage of these companies and their expertise?  If you don’t know where to start, feel free to contact me with any questions or recommendations to get you closer to your dream home.

The days of choosing a mortgage professional based on a personality test and box of donuts in your real estate office is changing.  Today with the tightening mortgage guidelines, having a mortgage professional who can review credit, employment, debt to income ratios, calculate assets, document the file and make sure that 2+2= 4 is the smart move for a business partner.

 We just got word that in 2nd quarter of 2009, the big mortgage investors are still taking pretty significant losses on performance of their mortgage securities.  These are not just the old loans that were originated 2 to 3 years ago with guidelines allowing anyone who could fog a mirror get a home loan, but these are the more recent loans requiring verification of credit and employment for approvals through underwriting.  Based on the fact that mortgage backed securities are still not fully performing, investors will start to require stricter guidelines. 

 We are not too far along of seeing minimum requirements of 660 to 680 credit scores on conventional loans and 640-660 minimum credit scores for FHA and VA loans from the investor overlays. 

 With the lending environment getting tighter versus looser, it means more mortgage professionals will need to adhere to new guidelines. It will require a mortgage professional who has years of experience and a person dedicated to educating themselves of the new changes. 

 In recent months, I have heard a new set of complaints from our real estate community of loans denied the day or week of closing.  When I speak to someone and hear this my head spins.  Further into the conversation, I uncover that the mortgage lender did not master their craft.  Some of these folks will not be able to adapt to the new mortgage market.  In this particular situation, if the mortgage lender reviewed the file properly from the beginning, he would have discovered in 10 minutes that the borrower should never have received a pre-approval.  Instead, the lender was going off old information and wasted not only his time but the clients and all persons involved.  This is just another instance that makes our industry look bad.

 I am hoping with the new mortgage licensing requirements coming down the peak that some of these lenders will get out of the market.  Sub standard pre-approvals do not work today.

 I am asking the Real Estate Community to be aware of our always changing market. Now is the time to make the right change in your mortgage business partners for a successful business.  The “hand out 3” mortgage lender card rule given to clients in this credit tightening market, is setting your business up for disaster.  Seek out a highly knowledgeable mortgage professional and interview them.  Make sure they truly know the ins and outs of mortgage lending business.  In the long run, this will make your business more profitable and your clients happy with the results.

Have you ever seen the movie “A Few Good Men” (Brown & Reiner, 1992) starring Tom Cruise and Jack Nicholson?  Well, if you have not seen this movie I highly recommend, it is truly an American classic.  This movie has intense scenes and several of the most memorable movie quotes.  Whether or not you agree with character Col. Nathan Jepsep’s (Jack Nicholson) antics, his character portrays higher standards and values that others could not live up to.  He had all his troops buy into a system called “Unit, Core, God, Country.”

 What’s the point?  The point is that top mortgage professionals also have a code we follow and live by.  We do not need a fancy license to perform over the competition, but it is pretty clear how different our services are.  I have built my business on these direct principals of “Honesty, Integrity, Under Promising and Over Delivering.”  Top notch mortgage professionals are more concerned at the end of the day that our clients get the right advice.  Now does that means we overcharge for our service vs. the other guys? Absolutely not!  We just see the end result of little different.  I never want to hear about a client of mine losing their home because they were put into a bad loan product, or were unaware they could not afford the payment.  I am also a homeowner and I want to see the American Dream extended to all that should be afforded this opportunity, but also the understanding that with homeownership comes responsibility. 

 I pride my business on these core values just as Col. Jepsep portrayed to his troops.  This is especially not the time to refer friends and family to the wrong person for mortgage services.  If that mortgage lender did not build their business on these principals, then it’s time for a 2^nd opinion.  Please feel free to give me a call.

Business Referral Network would like the chance to get to know you! Referral Networks are a great way to expand your business and get connected with new clients. We work together to make sure our friends, family, and customers receive quality services from reputable businesses.

We invite You to Our: Business Referral Network Happy Hour Event

May 27, 2009, 5:00pm at Darcy Magees, Tempe Market Place

Increasing Buying Power-Understanding Credit

Cherry Creek Mortgage Company will be holding a free class on understanding the in’s and
out’s of credit scoring on May 20, 2009 at 4:00pm . This class will be held at
Cherry Creek Mortgage 1630 South Stapley Drive Ste. 100, Mesa, AZ 85204.

This class will be taught by Charlie Brandes with Advantage Credit. Charlie is an expert
speaker/instructor on this topic and travels the entire state of Arizona talking to
realtors, consumers and borrowers about the power of credit.

Charlie will be covering the following topics:

What is the best mix of credit to obtain the highest scores

The do’s and don’ts with credit for buying property

How degrogatory information will impact your credit and buying potential

How to increase your potential buying power with better credit scores

Plus Charlie will go over proven tips to help prevent fraud and identity theft.

If you would like to attend, please RSVP by emailing me.

Cherry Creek Mortgage Company announced on February 20, 2009 that they are now requiring minimum credit scores of 620 or higher for most FHA and VA loans. This comes as no surprise since most industry standards with investors have already moved in this direction. These new credit score requirements will not apply to borrowers who are applying for an FHA Streamline Refinance or VA Interest Rate Reduction.

Now please be aware that this is NOT an FHA or VA rule. FHA and VA loans in general are not credit score driven programs. However, due to higher default rates on these type of loans, the investor market who buys these loans put in certain stop gaps to get a better handle on marginal credit score borrowers and high default rates.