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Loan Officer

Mortgage loans. Why all the paperwork?

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Mortgage loans – Why all the paperwork?

 Minneapolis, MN:  Getting a mortgage loan? Prepare to supply your Loan Officer with photo ID, your last 30-days of pay stubs, last two years W2’s, tax returns, last two months bank statements, divorce papers, and maybe even more. Then once you supply those documents, be prepared to answer question like: prove where that large non-payroll deposit on you bank statement came from.

Loan PaperworkAs a Loan Officer serving Minnesota, Wisconsin, Iowa, North Dakota, South Dakota, I am constantly asked why is there so much paperwork required to get a mortgage loan today. It seems that the lender wants to know everything about you these days, and you would be correct. Your mortgage lender does want to know a lot about you.  If you were to give a complete stranger a huge loan, for a 30-year commitment, what would YOU want to know about them?

To make it feel worse than it really is, from about 1999 until 2007 during the housing boom, there were many programs available that allowed for limited documentation, or even no proof of income. Many people took advantage of those programs. Unfortunately, a large number of those people were allowed to bite off more loan than they would have been allowed if they proved income, contributing to the real estate collapse starting in 2007.

Loan Documentation Requirements Today

No one wants foreclosures and bad loans. It isn’t good for the home buyer, the neighborhood, or the economy.  For that reason, mortgage companies need to verify and double check everything on the application, and to make sure you are a good risk.

There are three very good reasons that the loan process is much more onerous on today’s buyer than perhaps any time in history.

  1. The mortgage industry was a bit too trusting in the past. Lenders for example asked for a pay stub, but we took what you provided at face value, and there was no double check. This allowed fraud to become rampant. How hard would it be to scan a W2 that said you made $30,000 a year into a computer, then use Photoshop to change that the 3 to an 8, and now you make $80,000 a year income.
  2. Even without fraud, during the run-up in the housing market, many people qualified for mortgages that they realistically could never pay back. The government has mandated new guidelines that now demand that the mortgage lender  prove beyond any doubt that you are indeed capable of affording the mortgage. The rule is called ATR, or the “Ability to Repay” rule. So no more stated income, or limited income loans.
  3.  The lenders have never wanted to be in the real estate holding business. Since the collapse, lenders suffered huge losses that came close to destroying the economy, and were were forced to take on the responsibility of liquidating millions of foreclosures,  and negotiating millions of more homes in short-sales.

The Good News About Mortgage Loans

The friends and family who bought homes ten or twenty ago experienced a simpler mortgage application process. If you got a loan ten to 20-years ago, yes, it was easier. But at the same time, if you never experienced that in the past, your fame of reference is that it really isn’t all that difficult today.

Instead of complaining about the paperwork required, be thankful that that you can get a loan, and get it at these amazingly low mortgage interest rates.

How Real Estate Agents Risk their License everyday

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Don’t risk your Real Estate License

Many Real Estate Agents risk their license everyday without knowing it.  Generally this is by stepping outside of their official duties, and stepping into areas they shouldn’t. They usually don’t mean to, and are trying to be helpful, but…

Title Company Risk

Did you know that most states have insurance solicitation laws that may apply when you refer a client to an in-house title firm (or one with which you have a Marketing Service Agreement)?

That means that you might need a title insurance license to make certain referrals. The safest thing a real estate agent can do is to discuss title, what it is, and let their clients decide who to use.images1923532412

This includes real estate agents automatically ordering title services from their preferred title company without talking to clients and getting their permission.

Mortgage Risk

Did you know that mortgage laws also prevent non-licensed mortgage originators from discussing loans, loan terms, programs and interest rates?  A Mortgage Loan Originator License must be obtained BEFORE doing any of the following residential property mortgage loan activities: soliciting, originating a loan application, offering, or negotiating any residential mortgage loans.

Can a Real Estate Agent refer a client to a lender or Loan officer?  You bet, but they need to be very careful if they suggest loan programs, or talk about interest rates. A Real Estate Agent’s best bet is to simply tell the client that they are not a lender, and they need to ask the Loan Officer all mortgage questions.

CFPB (Consumer Financial Protection Bureau)

“Solicit” means attempting to sell or asking or urging a person to apply for a particular kind of insurance or loan from a particular company, and no person shall sell, solicit, or negotiate any insurance or mortgage without a license.

Regulators at the CFPB are turning their heads towards Real Estate Agents, now that they have caused a lot of headache in the banking, mortgage, and credit card industries.  Just like giving legal advice,  it is generally best for real estate agents to simply avoid the potential trouble, and think before you act, even if your heart is in the right place by not giving advice and referrals.

Top 100 Loan Officer 2015

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Cambria Mortgage’s Loan Officer Joe Metzler, out of their St. Paul, MN Office, has been recognized as one of the Top 100 Loan Officers in the Nation by Origination News, coming in at number 98. Read the list at http://tinyurl.com/ljqqkbj

Top Loan Officers 2015This is another is an ongoing set of accomplishments for Mr. Metzler, as he was also recently named the Minnesota Mortgage Associations 2014 Loan Officer of the Year.  Joe Metzler has been a top producing Loan Officer for Cambria Mortgage since 2000, and has over 20-years industry experience.  Joe has received other awards in recent years in recognition of his outstanding service and dedication to the mortgage industry, including:
  • 2011 – Top 40 Most Influential Mortgage Professions to Watch (NMPM)
  • 2010 – Top 150 Loan Officers in the Nation by Dollar Volume (Origination News)

Joe Metzler is a certified MMS (Minnesota Mortgage Specialist). Less than 1% of Mortgage Loan Officers in Minnesota have completed the requirements to earn this designation. This is just one of many ways that shows Joe’s dedication to his career.  His track record is exceptional by any standard. He believes in doing the job right the first time and providing a service you can depend on.

If you’d like to have Joe as your Loan Officer, he is licensed in MN, WI, IA, ND, SD. He can be reached at (651) 552-3681, or you can apply on his web site

Advantages of a Mortgage Professional vs Application Clerk

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Advantages of a Mortgage Professional vs Application Clerk

Buying a home is an expensive proposition, and usually the largest single financial transaction of the average persons life.  Not all mortgage loan officers are created equal.  It is important to understand the advantages of a true licensed mortgage professional,  versus an unlicensed application clerk.

A deserved premium is always given to those Loan Officers who have deep knowledge and understanding of the dynamics of mortgage financing and loan programs. They are an asset for different kinds of clients because of their life experiences, loan experiences, wisdom, and resourcefulness.

Most people simply contact their bank, and whomever answers the phone is who they entrust with the mortgage.  Why?  The next biggest group of people use whomever their Real Estate Agent suggests.  Why do you blindly trust these people?

Licensed versus Unlicensed

If I asked you if you preferred to work with a licensed or unlicensed Loan Officer, the answer is pretty simple. Just about everyone would say a licensed person. Yet the vast majority of Loan Officers do NOT have an individual Loan Officer License.  Depending on where they work, they are not ever required to have a license.

licenseIf they work at a bank, credit union, or mortgage company owned by a bank or credit union, no licensed required. If they work at a mortgage broker, or other non-bank owned lender, a license IS required.

But just because a licensed is not required, does not prevent someone from getting a license. If they really cared about you, and being the best they could be, they would show it by obtaining a license. This proves to clients they have met the requirements for background checks, schooling, passing testing, and continuing education.

How to Check for a License

All Loan Officers must have a tracking number, known as an NMLS number (Nationwide Mortgage Licensing System and Registry).  This is NOT a license number!

nmls

To verify a Loan Officer is Licensed, not simply registered, go to the NMLS Web Site at www.NMLSconsumerAccess.org.  Type in the Loan Officers name or NMLS number.

Towards the bottom of the page, it will say State Licenses/Registrations, or Federal Registration.

If it says: Federal Registration, and Federal National Mortgage Originator. This means the person is NOT Licensed

If it says: State Licenses/Registration, then lists one or more states, this means the person IS Licensed.

Who to Choose?

I am not saying that the person who is simply registered and NOT licensed is a bad person. I am not saying they don’t have experience. I am not saying that a person with a license is a good person…

But what I am saying, is someone who has taken the time to pass the required background checks, taken the schooling required, pass the required state and federal tests, and receives mandatory continuing education each year show you the consumer that they are true professionals. If the person you are working with doesn’t have a license, ask they why? An answer of “I don’t need one” is a poor answer.

Clients enjoy a peaceful mind knowing that an important aspect of their lives is in the hands of a highly professional Loan Officer. This draws the line between application clerks and real professionals.

In the context of service, respectfulness, dedication, and commitment to helping others, I am choosing a Licensed Professional, regardless of the industry!

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Joe Metzler is a Senior Mortgage Loan Officer for Minnesota based Cambria Mortgage. He was named the 2014 Minnesota Loan Officer of the Year, and provides Home Mortgage Loans in MN, WI, IA, ND, SD.

He can be reached at (651) 552-3681

2014 Minnesota Loan Officer of the Year

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Cambria Mortgage’s Loan Officer Joe Metzler, out of their St. Paul, MN Office, was awarded 2014 Minnesota Mortgage Association’s Loan Officer of the Year.

MN 2014 Mortgage Loan Officer of the YearHe was presented with the award at the MMA Annual Holiday Event on December 9th, 2014.

This is a huge accomplishment for both Joe, as there are over 100 companies included in the MN Mortgage Association.  Joe Metzler has been a top producing Loan Officer for Cambria Mortgage since 2000, and has over 20-years industry experience.  Joe has received other awards in recent years in recognition of his outstanding service and dedication to the mortgage industry, including:

  • 2011 – Top 40 Most Influential Mortgage Professions to Watch
  • 2010 – Top 150 Loan Officers in the Nation by Dollar Volume

He is a certified MMS (Minnesota Mortgage Specialist). Less than 1% of Mortgage Loan Officers in Minnesota have completed the requirements to earn this designation. This is just one of many ways that shows Joe’s dedication to his career.  His track record is exceptional by any standard. He believes in doing the job right the first time and providing a service you can depend on.

If you’d like to have Joe as your Loan Officer, he is licensed in MN, WI, IA, ND, SD. He can be reached at (651) 552-3681, or you can apply on his web site.

Wells Fargo and B of A top in complaints

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St Paul, MN:  This isn’t shocking news to us, but it looks like the big banks, Wells Fargo and Bank of America, top the list of consumer complaints – especially for mortgages.

Read the story from the Washington Business Journal at http://tinyurl.com/ljs3csh 

You can avoid a lot of the problems if you understand who you are working with. Always work with an experienced, professional loan officer. The largest financial transaction of your life is far too important to place into the hands of someone who just quotes rates, but is not capable of advising you properly and troubleshooting the issues that may arise along the way. But how can you tell?

80% of Loan Officers are NOT Licensed

CHECK YOUR LOAN OFFICER OUT on the Nationwide Mortgage Licensing System and Registry 

http://www.nmlsconsumeraccess.org

Bank Loan Officers (Registered) versus SAFE ACT (Licensed) Loan Officers?
There is a BIG difference YOU need to understand

Washington has been busy protecting consumers from bad lenders right? Wrong! They have only done half the job, and sadly, the general perception by the public as to who is the better lender choice is completely wrong. Most people feel the brokers and the non-bank mortgage lenders have created all the problems. This isn’t true. Just the opposite. Consider the fact that Fannie Mae, Freddie Mac, and banks make the rules, and the banks review, underwrite, and fund the loans for brokers.

Recent changes to the lending industry requires all loan officers to have a tracking number, known as an NMLS number (Nationwide Mortgage Licensing System and Registry). It should be displayed on their business cards, E-Mail, web sites, all correspondence, and most loan documents. The display of the NMLS number may incorrectly make consumers believe the Loan Officer is licensed. Only 20% of Loan Officers are licensed. The rest are simply registered. Working with an unlicensed, untrained Loan Officer is not in a consumers best interest.

Simply put, Loan Officers at Banks, Credit Unions, or Mortgage Companies owned by a bank are NOT REQUIRED to be licensed, take classes, take continuing education, or pass any state or federally mandated tests to be a Loan Officer!

It is hard to determine if the Loan Officer is simply registered, versus licensed. nmls_checkWhen looking up a loan officer, you have to go to the bottom of their NMLS identification page and look under State Licenses/Registrations or Federal Registration heading.

  • A LICENSED Loan Officer will say “State Licenses/Registrations” and will have one or more STATES listed with all their state licensing information listed.
  • An UNLICENSED, but simply REGISTERED Loan Officer will say “Federal Registration” and the something like “Federal Mortgage Loan Originator”.

Now I am not trying to make this into a David versus Goliath story, but I am trying to emphasize the huge differences between Loan Officer training and education.  Look at it a different way. If you are sick and go to the Doctors office. Do you want to be treated by the receptionist, or the Doctor?

How to pick an expert Mortgage Loan Officer

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With today’s super low mortgage rates, many people are looking to refinance or buy a home.  Everyday, they call lenders and ask “What is your rate.”  A seeming logical question to ask – but the reality is, the #1 most important aspect of a successful mortgage transaction is the quality of the Loan Officer.

When selecting a Mortgage Loan Officer, most people mistakenly call their local bank first and assume the banks have hired qualified people.  The reality is, most banks hire relatively new, and have low paid people as mortgage loan officers. Bank Loan Officers are NOT required to have any education, nor do they have to pass any sort of mandatory state or federal tests to be labeled a loan officer. Many of the big banks staff their 1-800 phone numbers with temps.  Yes, you heard me – temps!

The secret to selecting an expert is a combination of experience and training.

An experienced Loan Officer can help you understand the entire mortgage process and will be able to determine the best loan for you based on your individual goals. The right loan for someone who plans to stay in a home for three years and who has increasing income, may not be the right loan for someone who wants to have the loan paid off within 15 years and can afford a higher payment. The first borrower may find a five year adjustable rate mortgage the best option, while the second borrower may realize a 15 year low fixed rate mortgage matches her needs best.

Many borrowers find the mortgage process very frustrating. They feel they are kept in the dark about the process and problems that arise which cause delays. An experienced Loan Officer does not over promise, but rather explains the type of problems you may experience and the solutions to those problems. By keeping you informed and protected, an experienced loan consultant reduces your stress.

A poor inexperienced application clerk (loan officer) may suggest you fudge information on your loan application, or may not get a complete application out of laziness. The more complete and accurate your loan application is from the beginning, the faster and smoother your loan underwriting will be. The industry has evolved to the extent that fraudulent or misleading information is almost always uncovered by fraud alert systems that scrutinize employment and residency information. You are required to be honest in completing a loan application. Do not do business with any loan officer who tells you otherwise.

Lastly, an experienced loan officer can explain how closing costs and interest rates are dependent on one another. The more fees you are willing to pay, the lower your rate. The less fees you are willing to pay, the higher the rate. Many loan officers will tell you they have the best rate only to surprise you with unreasonable closing costs. It is best to work with a loan officer who explains all of your rate options with you, and who will suggest a rate and fee combination that works best to meet your long term goals. The right loan officer will always get an exact title fee quote so that the Good Faith Estimate provided to you is accurate.

Once you’ve started talking with a Loan Officer – verify their credentials.  All Loan Officers are required to have and display an NMLS number (Nationwide Mortgage Licensing System and Registry). Go to www.NMLSConsumerAccess.org, and type in your Loan Officers name or number.

You can see their employers, and work history – but more importantly, you can see if they are simply a registered but unlicensed Loan Application Clerk, or an actual Licensed, and Tested Loan Officer.  It is a bit trick to tell, but at the very bottom of their NMLS information page, it will say one of two things:

1) Federal Registration – then Federal Mortgage Loan Originator. This person is a unlicensed application clerk

2)  State Licenses / Registrations – They list one or more individual state licenses. This person is licensed and tested both Federally, and in each state listed.

For the largest financial transaction of your life, it is smart to NEVER WORK WITH JUST AN APPLICATION CLERK

 

What do you know about your Mortgage Loan Officer?

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What do you know about your Mortgage Loan Officer?

All Mortgage Loan Officers are required to register with the Nationwide Mortgage Licensing System (NMLS) & Registry. The Registry assigns each Loan Officer a unique identifier number that stays with them throughout their career. Using this number you can review professional background information for a Loan Officer through the NMLS database prior to doing business with them.

The display of an NMLS number tends to lead most people to believe all Loan Officers are licensed. This is far from the true. Only about 20% of Loan Officers are actually licensed, the rest are simple registered.

Licensed Loan Officers are required to have pre-employment mortgage education, must pass criminal background checks, must pass a difficult Federal Licensing test, must pass a difficult State Licensing test in EACH state they wish to do business, and must complete yearly continuing education requirements.

Simply registered Loan Officers could have been flipping burgers last week, and doing Loans today. While their employer may have some sort of internal hiring and training system, there are no mandatory state or federal licensing requirements, and no educational requirements.

Now I am not saying that simply registered Loan Officers are bad people, but when you are working on the largest financial transaction of the average persons life, who would you prefer? Licensed or unlicensed? Another way to look at it is to assume you are sick. Sure, you can go online to WebMD, self-diagnose your illness, go to the pharmacy, buy a scalpel, and attempt self surgery. Or you can go to the Doctor.

So how do you verify if a Loan Officer is Licensed or simply Registered? It only takes minute to find out.

  1. Simply go to www.NMLSConsumerAccess.org.
  2. Enter the Loan Officers Name, or their NMLS #
  3. Click on their name

Scroll to the bottom of the page.

  • If it says STATE LICENSES/REGISTRATIONS, then lists one or more States – They ARE A LICENSED Loan Officer
  • If it says FEDERAL REGISTRATION, then says Federal Mortgage Loan Originator – They ARE NOT LICENSED.

Licensed or simply registered? I think the choice is clear for smart homeowners.

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There are differences in Loan Officer qualifications. Know how to tell who you are working with

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Is your Loan Officer Licensed, or simply registered? There is a BIG difference YOU need to understand

Recent changes to the lending industry requires all loan officers to have a tracking number, known as an NMLS number (Nationwide Mortgage Licensing System and Registry). It should be displayed on their business cards, E-Mail, web sites, all correspondence, and most loan documents.

The display of the NMLS number may make many believe the Loan Officer is licensed. Sadly, this isn’t true, and working with an unlicensed, untrained Loan Officer can cause you many headaches and hassles.

Simply put, Loan Officers at Banks, most Credit Unions, or Mortgage Companies owned by a bank are NOT REQUIRED to be licensed, take classes, pass any tests, take continuing education, or pass any state or federally mandated tests to be a Loan Officer!

CHECK YOUR LOAN OFFICER OUT on the Nationwide Mortgage Licensing System and Registry at http://www.nmlsconsumeraccess.org

My NMLS # is 274132

It is hard to determine if the Loan Officer is simply registered, versus licensed. When looking up a loan officer, you have to go to the bottom of their NMLS identification page and look under State Licenses/Registrations or Federal Registrationheading.

  • A LICENSED Loan Officer will say “State Licenses/Registrations” and will have one or more STATES listed with licensing information.
  • An UNLICENSED, but simply REGISTERED Loan Officer will say “Federal Registration” and the something like Federal Mortgage Loan Originator.

Who is Best? Banks, Brokers, or Direct Mortgage Lenders?

Now I am not trying to make this into a David versus Goliath story, but I am trying to emphasize the huge differences between Loan Officer training. As the new requirements have been rolling out across the country, many Loan Officers who have been unable to meet the new licensing and testing requirements, and especially those who have failed the new tests, have simply gone to the large banks to work.

Calling “1-800-Big-Bank” to get a loan??? YIKES. Here is a chart to show the differences:

SAFE ACT Loan Officers
(MLO’s)		 Bank Loan Officers (RMLO’s)
Have Personal License Yes No
Registered in NMLS Yes Yes
FBI Background Yes No
Fingerprinted Yes No
Surety Bonded Yes No
Pre-Employment education Yes No
8 hours continuing education each year Yes No
Personal Credit checked Yes No
Pass Tough State Test Yes No
Pass Tough Federal Test Yes No
Complaint mechanism’s Yes No
Licensing fees and renewals Yes No
Loan Officer Designation MLO RMLO
NMLS = Nationwide Mortgage Lender System and Registry (Tracking Number)
MLO = Mortgage Loan Officer (Licensed and Trained)
RMLO = Registered Mortgage Loan Officer (simply registered)

I think the choice is clear. Who would YOU rather be working with on the largest financial transaction of your life? A fully trained, licensed, fingerprinted, and background checked Loan Officer – or the untrained, unlicensed, and simply registered Loan Officer at the bank?

The funny part is the cost for the service based on rates and fees are usually about the same, if not slightly cheaper in both rate and costs. Plus non-bank lenders usually close the loans faster, and have more knowledgeable and experienced Loan Officers.

The best S.A.F.E. ACT Loan Officer (non-Bank) analogy I can use is having a choice of working with an experienced CPA to do your taxes vs. you using Turbo Tax to do it yourself, but paying the same price.

Finally, THIS IS A CLEAR REASON why people should follow my #1 mortgage shopping rule: GOOGLE THE NAME OF YOUR LOAN OFFICER before allowing them to handle the largest financial transaction of your life!

Are you a pop tart agent?

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Are you a pop tart Real Estate Agent? Do you instantly jump when a new buyer calls? Stop wasting your time, set proper expectations. Is your buyer really pre-approved for a home mortgage loan? Learn more with Joe Metzler and Dave Harvey of Cambria Mortgage, and the MN Real Estate Daily Show.

Thoughts? Log on and post your responses!
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Refinancing? Common mistakes to avoid

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Mortgage Interest Rates are near historic lows. You want to refinance?
Common mistakes, and what NOT To Do

There are a lot of things “not to do”. I will point out only the 3 most common mistakes I see people make.

  1. Setting an unrealistic goal. I always get inquiries from people who say something like, “I have a 30 year fixed rate loan at 5.875% and I will refinance ONLY when rates get to 4.0% with no closing costs”. Sometimes I call people back and say, “Why 4%? why not 3% or 2%? They say, “Well rates are not going to go that low”. Right and they are unlikely to go to 4% with no closing costs also (“no closing cost” loans typically cost anywhere from 1/2% to .75% higher than the going interest rate) You should first succumb to the fact that once you can lower your rate with no out of pocket expense, you should probably refinance. Don’t draw unrealistic interest rate lines in the sand. They get blown away too easily.
  2. The “Once rates start dropping, they are going to continue to drop and I’m smart and I am going to lock when rates hit the bottom of the market” syndrome. It is very hard to guess the interest-rate cycle, and pretty hard to catch the bottom. Remember that rates can rise fairly quickly.
  3. “If the rate goes down just another 1/8th percent, then I’ll lock” This one just kills me! I see people lose all the time over this theory. If your current rate is 5.875% and today’s rate is 4.875%. LOCK & CLOSE! Most people have what I call “interest rate block”. They get a rate stuck in their head, and that is the rate they want, no matter what. Most people fail to realize (and most loan officers fail to show them), that the difference on the average loan over 1/8th a percent is usually less than $15 per month. If you can save $150 per month on your loan at today’s rate, why gamble? Why hold out for another $15 when the odds are against you?

Don’t get piggy. Work with us. Set a goal and lock when it gets there. Are we going to hit the bottom? Probably not. Are we going to save you money? Yes. If you can save money with no out of pocket costs, than you have nothing to lose. If you want to gamble go to Las Vegas. It’s a heck of a lot more fun. Apply Now

Extra Tricks to Save Money When Refinancing

The purpose of most refinance loans is simply to save money. The goal is to minimize your expense over the life of the loan or to minimize your monthly payment in the near future.

If you can swing it, don’t roll every cost of refinancing into your new loan. Most people escrow for taxes and insurance. If you do, your current lender must give you escrow refund within 30 days of paying off their loan. Your new lender, be it us or someone else, must take the equivalent amount of money (or more) at closing to start the new escrow account.

Remember that you always get to skip a month of payments. If you close June 5th, your first new payment is August 1st.

Knowing this, paying some of your closing costs out-of-pocket will save you even more money in the long run. Why roll in $4000 in closing costs, when you really only need to roll in $2000 ($1000 escrow refund + $1000 missed payment = $2000). Paying that $2000 over 30 years doesn’t make sense if you don’t have too.

On the other hand, some people love the fact that they didn’t pay anything out of pocket to refinance, got a nice escrow refund check, then got to miss a mortgage payment. They use the ‘extra’ money to pay bills, go on vacation, etc.

Picking a Lender & Closing Costs

Shopping for a home loan is confusing. No matter what we’re looking for — from cars to refrigerators’ — there’s a built-in element of confusion. Why? Lack of knowledge. An unfortunate rule of thumb is that the less we know about something we need to buy, the more we can expect to pay for it.

Shopping for a mortgage in Minneapolis, St Paul, Duluth, Rochester, Madison, Milwaukee, and throughout all of Minnesota and Wisconsin is complex at best — even for the savvy previous home owner. Daily rate changes, time-sensitive lock-in periods, points, lender’s fees… plus the emotional element of probably the largest financial deal any of us will ever make. Throw in to this already murky stew the ingredients of tricky internet mortgage rate advertising, commissions for every officer, agent and broker who ‘helps’ in your transaction, and the obscure differences between ‘rates’ and ‘fees.’ It’s no mystery that many buyers settle for a home loan that exceeds their monetary means out of sheer exasperation!

Please review our information on closing costs and “BAD Good Faith Estimates“. There is currently a large number of fly-by-night lenders doing some incredibly misleading rate & closing cost advertising. Remember, if it sounds too good, it probably is! Also check out my article “Best Rate or Lowest Cost” for more loan comparison information.

The Bottom Line
Remember, the first rule is that there are no rules. You should refinance if it makes sense for you. Every person & situation is different. What makes sense for one family, may not make sense for you. Call me today to discuss your wants, needs, and goals. Together we’ll determine if refinancing makes sense for YOU.

Click here for more information on the actual loan process.
Click here for 10 Tips to a Smooth Closing
Click here for 10 Mistakes to Avoid

NAR fees are up, and I’m on a budget

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NAR fees are up, advertising costs are up, real estate sales are down, but as a Real Estate Agent, you need to find more clients, and you need to do it on a budget. Here are a few simple tools to increase your business and make more money from Joe Metzler at Cambria Mortgage, and the Mn Real Estate Daily Show.

Thoughts? Log in and Post!

Tough Real Estate Market? What are buyers and sellers supposed to do?

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The real estate market today is one of the toughest in recent history. A large number of foreclosed homes on the market is marking it tough on the traditional home seller. While every market is different, most areas have seen a significant drop in value.

The mortgage industry has tighten lending, with a virtual elimination of all non-traditional financing and “creative” zero down type options (although VA and USDA are still around and great zero down options). Most programs today require 3.5% to 5% down MINIMUM and good credit. Gone are the days of easy lending.

Washington has tried “fixing” mortgage lending, but has essentially failed with bad programs like FHA Secure, Help For Home Owners, HARP, and HAMP. They’ve made industry changes that have cost home buyers more money, like HVCC, and LO Compensation. They’ve created more confusion with the new three page Good Faith Estimate, and the whopper of them all… Only requiring half of the Loan Officers to have a license!

Traditional sellers have the upper hand and an easier time in most cases in the “condition of the property” category versus a foreclosure, but it is still very tough when the banks are liquidating foreclosed properties, and the prices they are giving some of them away at.

So, what is a seller and buyer to do? How does a seller sell and a buyer buy in today’s market?

First, understand that because of the large volume of foreclosed properties, it is a great time to be a buyer, whether you are a move-up buyer or a first-time buyer.

For sellers, now is not the time to try and sell your own property. You need the help of a FULL-TIME, experienced Realtor to help guide you through the process. Buyers need the same help to guide them through the maze of properties, both traditional and bank-owned. Having a good agent is extremely important. Take some time to interview your Realtor. How long have they been in business? How many sales have they completed? How many buyers have they helped? Can you get references? Don’t just pick your agent from an open house, or use your sisters best friend who got her license last month.

For move-up buyers, you may have to give in to a lower than you like selling price, but you should reap a nice reward on any new home you buy. This is especially true if you are moving from the low $200k to the mid $300k range, as homes that were selling in the $400k range are now in the $350k. Therefore, even if you have to give up a little on your current sale price, you should more than make up for it on the buy side. Remember, a house priced right, and realistic, will sell even in today’s market right away. Furthermore, with today’s standard fixed rates hovering around 5%, you can still lock in historically great rates!

For first-time buyers, it is a great time to find aggressively priced homes, whether it is a bank-owned foreclosure, or a motivated traditional seller. Not all buyers are ready, or want to tackle “AS IS” foreclosures, so be sure to be honest with yourself about what you are doing to avoid a potential disaster down the road.

Today’s prices are again extremely affordable in the first-time buyer starter home category. Even though most zero down programs are no longer available, with proper negotiation, you can get the seller to pay most, if not all of your closing costs.

This means you can buy a $150k home for just $5250 out-of-pocket. With programs like FHA, the entire down payment can be a gift from family members, or community assistance programs. That is how it was always done prior to about 1999… and somehow people bought houses then, so don’t sit back waiting. NOW is the time to buy!

Finally, one of the first things you should do is get pre-approved with a quality lender who will discuss with you your qualifying ability and program options in today’s market. Someone who has the knowledge, expertise, and full range of programs (like FHA) to bring you to a successful no surprises closing. This is never the guy on the internet posting the lowest rate, or the unlicensed bank representative at the 1-800 number bank call center.

A word of caution. If you are shopping for a lender based on rate, be prepared to get screwed. Be sure to read these informative articles for more information: “Rate Shopping – How to do it right“, and “Lender Shopping – How to do it right“.

No matter what your real estate needs are, buying or selling, with the proper guidance of full-time professional Realtor and Loan Officer, you should be able to have your dreams come true.

Are you being pressured by your Realtor to use “their” lender?

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Are you being pressured by your Realtor to use “their” lender?

Minneapolis, MN: When buying a home, unless you have cash, you are going to need financing! As a consumer, you have the right to pick whatever lender you decide is best for you. You will likely also receive all sorts of lender suggestions from those around you, and maybe even high pressure to use specific lenders.

My take on the state of the industry and why you are being pressured to use a specific lender follows one of three scenarios:

  • You have a competent real estate agent who is concerned about the transaction closing. If they have never worked with the lender you plan on using, they are naturally concerned about that lender’s ability to perform. More often than not, this is an unfounded in fact fear, perpetuated from hard to close sub-prime loans that long ago disappeared from the market. More often than not, simply having your lender and Real Estate Agent talk to each other will address the Real Estate agent’s concerns. If they are both competent professionals, they’ll recognize that in each other and problem solved.
  • Most real estate agent today work at a company that has their own lender. The agent is under enormous pressure from management to refer all buyers to the in-house lender.  Why is that? Because most of the profit from the real estate operation accrues from the in-house mortgage and title company operation, and not from the real estate side.  You will almost always find that the rates offered by the in-house mortgage lender are higher than what you could find from other lenders. The in-house lender knows the statistical evidence that 75% of home buyers accept the first rate offered to them and set their profit margin accordingly. If the lender your agent is recommending is offering you higher rates than another lenders you judge to be competent you now know why their rates are higher – they are responsible for producing excess profit for the parent organization.  Your choice whether you want to pay for that excess profit or not.
  • The agent is getting an under the table kick back from the lender – yes illegal, and unfortunately, yes it continues to occur. The specific agent themselves is getting a monetary kickback, their advertising paid for, or some other form of payment by the lender or specific loan officer. While very rare, it does happen.

If the rates offered by the recommended lender are higher, it is pretty simple – you are not getting the best deal in the market. You are paying for someone’s additional profit. That “someone” could be the big bank name as their rates are higher to pay for all of their fixed overhead and advertising. It could be the real estate company that depends upon extra mortgage affiliate profit to pay the commission splits they are offering to real estate agents, or something else.

Most buyers focus on the monthly payment difference between rates and end up thinking something like, “the agent wants me to use this specific lender and the monthly payment is only $15 dollars more, so who cares”.   What you’re missing is the present economic value difference that an .125% or .25% higher rate means in dollars today.

What I mean by that – if the recommended lender is offering you a 5.00% rate and other qualified and competent lenders tell you they can off you a 4.75% rate, the important number is not the $15 or $30 per month difference. The important number comes from asking the 4.75% rate lender, “What is the dollar amount of the lender closing cost credit you will give me if I do the loan with you at 5.00%?”  Another way to look at it is this, at 4.75%, maybe your closing costs are $6,000, but at 5.00%, your closing costs are only $4,000.

That is the dollar amount that could have been in your pocket, but if you give in to the pressure, and instead transfers to someone else’s pocket. When you are getting that level of pressure, someone has a vested interest in who you obtain your mortgage through.

Bottom line: Talk to the Realtor’s suggested preferred lender if you want, but be sure to talk to one or two other lenders, then YOU CHOOSE who YOU WANT.


 

(C) 2011 – Joe Metzler – Mortgages Unlimited, St Paul, MN #274132. Re-blog but do not steal!

We lend in MN and WI ONLY. Searching rates on home loans, rates for refinancing your mortgage in MN or WI. We have some of the best rates on home loans!

NAMB files 2nd lawsuit this week against Federal Reserve

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NAMB, the National Association of Mortgage Brokers today filed the second lawsuit this week against Federal Reserve Board over the new Lender Compensation rules set to begin April 1, 2011.

NAMB’s lawsuit seeks to obtain a temporary restraining order, and is using different arguments than the lawsuit filed by NAIHP on March 7th.