This is only true coming from misinformed loan officers that don’t study their industry.  If they don’t know how to structure the loan or what loan program to use, your score is too low! (At least for them to get you approved.) If it cost the same, would you rather have a major surgery done by a hourly waged nurse or a skilled surgeon that has many successful surgeries to his credit? The answer is obvious. The mortgage business changes rapidly and you want to make sure that you are dealing with someone knowledgeable about the changes. What was true even 3 months ago, may be a complete fallacy today.

• Getting a Loan From Your Local Banker Will Save You a Ton of Money.

Maybe, depends on you and your situation. While your banker may have a wealth of experience in the lending business, their primary focus is not on you, but their bottom line. If you have perfect credit, money down and great job history the bank is a good bet. Most of their loan programs are designed around lending money their way. Most banks offer 5 or 6 programs, while I have a relationship with over 150 banks, many that don’t do anything but mortgages. This gives me, and more importantly—You, access to over 1000 programs.  My primary focus is not to fit you into one of a few programs, but to find a few programs that fit YOU and YOUR situation.

• My Realtor will Send me to the Right person.

Your Realtor will send you to the person that they have a relationship with. I have Realtors send me business all the time. The reason they send business to me is because I get loans closed. I don’t have a personal relationship outside of work with any of them. I don’t buy agents lunch or take them out drinking to bribe business out of them. Most loan officers do this because it’s easier to buy agents lunch than it is to actually earn their referrals. Every Realtor that sends me business does so because our first transaction impressed them.  You might get a good referral from a Realtor, then again, you may get referred to the Realtors’ second cousin who just got in the business.

• I filed a Bankruptcy a couple of years ago, So I know I Wouldn’t Qualify for $0 Down.

Don’t let anyone tell you that you can’t buy a house with a bankruptcy. The traditional school of thought says you have to wait two full years after discharge to even be considered for a mortgage. Depending on which type of bankruptcy you filed will determine what is actually possible for you.

• Bad Credit Stays On your Record for 7 Years or More.

This is true, but in most cases loans are evaluated on the last 12 –24 months. They may totally disregard ANY adverse credit issues prior to that 12-24 month window. Most of the loans with zero or no money down cater to those who need leniency in the area of credit. 

Also, having not re-established credit doesn’t mean you cannot get a loan. There are other means for a lender to establish credit history.

• Credit Counseling May Harm Your Credit Rating.

In certain instances, consumer credit counseling services may be a wise decision.  These services can provide education and help with debt problems.  The Credit Counseling Company will set a budget for the client based on their income and how much debt there is to pay off.

The problem comes when counseling companies do not meet the client’s monthly obligations with their creditors.  As a result, they begin to have late payments on their credit report.  In other words, they may not meet the creditor’s minimum monthly payment requirements because the budget calls for a lesser payment.

Overall, credit counseling is an effective tool to reduce debt as long as they meet the client’s due dates and the minimum monthly payment.

• Getting Your Mortgage Loan from the Internet May Cost You.  It could be a costly mistake if you get a loan online from a company in different parts of the country.  There are different rules and guidelines for different states, cities, and even counties.  It can be risky to obtain a mortgage loan from a company across the country if they are not familiar with the rules that govern the area where the property is located.

Typically local companies will be more concerned about their reputation and doing a good job for their customer.  I operate from referrals so it is very important that I meet my customers’ expectations.  Getting a loan online can also take longer because they will not have service companies (title companies, appraisers, and others) to do the job in a timely manner.

Mortgage loans are complex and may not make sense to purchase online. This is especially true if the borrower is looking for maximum service and care.

Rates are headed up

Well for starters, I can tell you what they don’t have in common. Birds are not at  the  whim of the economy necessarily while rates don’t have feathers and wings.
Now for what they do have in common. 

Right now, birds of all kinds have started migrating from their winter havens and are heading back north to the fertile feeding grounds of their youth. Mortgage rates have also started their trek northward as the government feeding trough has been pulled away as of March 31st. Rates have been held artificially low over the past year and a half on a Treasury backed plan to purchase 1.3 Trillion in mortgage backed securities to ensure that the waning private demand in these debt instruments didn’t cause a catastrophic run on the bond market. With so many investors leary of any investing into the mortgage industry, the government felt forced to come to the rescue. Now the big question is this, will the private investors come back to the market and if they will, how much of a correction do they need to see before bonds hit a floor?

If I knew the answer to that question, I probably wouldn’t be a mortgage broker. Many of the large bond traders have vocalized that they feel bonds are too high right now. PIMCO, a massive bond buyer, recently announced that bonds were 50 bps overpriced (That was almost 150 bps ago). Since the 23rd of March we have witnessed a almost 200 bps slide with the FNMA 4.5% coupon which has fed the quarter point rate increase we’ve seen since that time. My bond quote service is telling us to be in full lock mode, leave nothing floating and lock as soon as possible. If you’ll remember I prognosticated on this subject when I talked about The Future of Interest Rates, and guess what, so far I’ve been right on the money.

Now for another prognostication that, if you’re a mortgage customer will have an impact on your loan process, or if you’re a loan officer will have an impact on your reputation and pocketbook. We’ve been spoiled the last two years with rates in a seemingly downward spiral and an endless amount of clients “riding the fence” waiting to lock at just the right interest rate. As a LO I’ve had the luxury of flipping a loan from one lender to the next if Lender A didn’t like the loan and receiving no penalty with regards to rate from Lender B. Extensions and relocks have been free for the majority of the past year as pricing seemed to always be a little better than when I locked the loan.  Boy are we in for a rude awakening. No more of that funny business anymore. Lenders will be savagely charging all they can for extensions and re-locks and if Lender A turns a loan down it won’t be any fun losing money to send the loan to Lender B at the same rate.

Here’s some more food for thought, there are many major lenders that have also been riding this gravy train and have not hedged their pipeline very well and are now needing to unload millions of dollars of loans without closing them. That may sound counterintuitive but it could cost them far more to close these loans than it would to turn them down. If you are a mortgage customer you need to be sure you are working with a high quality loan officer that knows how to put together a clean file. Ask your LO what his pull-through ratio is and the higher the percentage the greater. I don’t mean app to close pull through, I mean processing to close pull through. How many loans do they submit compared to what they close?  If you are a mortgage professional, I shouldn’t have to tell you that now is not the time to be sloppy. Be an i dotter and a t crosser, nitpicky is the newest fad and you better get good at it.

Lastly, for all you fence sitters that have been waiting to refinance. You better jump now if your ever going to do it. Look at the numbers and be prepared to make a decision now, not when rates get better, because they probably aren’t for a while.

Another great reason to get quaified as early in the process as possible is to insure the fastest closing possible. If there are multiple offers going in on a home, you may be at a disadvantage if you are not able to secure financing quickly. Don’t wait until the last minute!

We have home purchase specialists standing by that can give you FREE home purchase finance advice. Feel free to request a FREE Rate Quote or to Contact Us directly.

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