Danger of automated mortgage pre-approval sites

It’s 2015.  I understand the daily advancements on computers, technology, and convenience. Popping up all over are sites that that claim the ability to “allows home shoppers to get pre-approved quickly and easily.” Instant pre-approval sounds cool.

But when it comes to home buying, potential home owners should be extremely wary of trusting any web site offering automated mortgage pre-approval tools.

The Traditional Mortgage Loan Process

The traditional process is you complete a loan application. ffA real live person reviews the information, talks to you about your situation, uses knowledge and expertise to explore all avenues and issues.  Then your file is run through one of the major AUS (automated underwriting system) of Fannie Mae, Freddie Mac, FHA, etc.

This AUS process only takes a few minutes, and the lender is provided with an answer to your loan application.  So if the computer says YES, you are good right?  NO, not even close.  This is just the first step.

The first major issue is simple. Garbage in equals garbage out.

Next, just because the AUS indicates ACCEPT (yes), there are still pages of information and requested items that need to be received and reviewed for accuracy. Common items are W2’s, pay stubs, bank statements, tax returns. Depending on your situation, you may need further items, like bankruptcy papers, divorce decrees, and more.

But it is the little nuances that even trip up less experienced Loan Officers, who unknowingly issue worthless pre-approval letters.

I was recently contacted by a client who had one of these instant pre-approval letters.  They had bought a home, and there application was now being fully underwritten by the lender. Just days before closing, underwriting was denying the file. The buyers big question, is “How can that be?  I was Pre-Approved?”

The issue in this case, was the income number the buyer input into the system was 100% correct. But the buyer was a 1099 contractor, not aW2 employee, who had only been with this company about 6 months. In the mortgage world, short-term contractor income is not allowed as qualifying income.

Did you know this? This is just one example. Could you be running around with an invalid pre-approval letter based off of income not allowed? You you make an offer, give notice on your apartment, and then possibly be homeless?

Your largest financial transaction of your life is too important to trust to just anyone, let alone a computer, without wisdom and input from a licensed, experienced, and professional Loan Officer.

Zillows New Pre-Approval Tool

Zillow recently announced a semi automated tool where potential home buyers enter very basic information. If they like the results, you continue by entering your name, email, and phone number. Your information is then sent immediately to the lenders in Zillows Mortgage Marketplace, who will get your information, pull your credit, and send you a pre-approval letter.

I don’t know about you, but the last thing I want to do is have my information shared with 5, 10, 20 lenders, who all pull my credit, and have my personal information. I don’t want that floating around with a bunch of unknown people.  I also don’t want to be contacted by a bunch of meal time calling aggressive lenders who just paid money for my “hot lead.” And I haven’t even started about potential identity theft.

The Best Move When Getting Mortgage Pre-Approved?

When buying a home, your best move is to always work with a local lender the traditional way. The guy located in your geographic area, with a local reputation to protect. There is nothing anyone on the internet on the other side of the country can offer that you can’t get down the street.  More often than not, it is just the opposite… Especially when it comes to down payment assistance programs for first time buyers. These programs are always only available from the local lender.

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 Joe Metzler is a Senior Mortgage Loan Officer for Minneapolis Minnesota based Mortgages Unlimited. He was named the 2014 Minnesota Loan Officer of the Year by the MN Mortgage Association, and was ranked #98 of the Top 100 Loan Officers in the Nation in 2015 by Origination News. He provides Home Mortgage Loans in MN, WI, and SD. He can be reached at (651) 552-3681


Minneapolis Down Payment Assistance

Minneapolis Down Payment Assistance

Own Your own Home!

The City of Minneapolis, in partnership with Minnesota Housing,  the Minnesota Homeownership Center, and Mortgage lenders like us here at Mortgages Unlimited are getting together to provide access to down payment assistance, quality, affordable mortgages and free, non-biased housing experts that can help you become a successful home owner!

Maybe you’ve thought homeownership wasn’t possible, or you didn’t know where to start. Maybe you thought your credit wasn’t good enough or you haven’t saved enough for a down payment. We can help!

Down Payment Assistance – Homeownership Opportunity Minneapolis

The City of Minneapolis wants to make affordable homeownership a reality for you. The City is providing up to $7,500 to qualified buyers to cover down payment and closing costs when purchasing a home anywhere within Minneapolis city limits. To qualify for this program, you must meet the following income eligibility requirements:

  • Homebuyers with household income up to 115% of the area median income (currently $99,500) are eligible for up to $5,000
  • Homebuyers with household income up to 80% of the area median income (currently $69,280) are eligible for up to $7,500.

Quality, Affordable Mortgages

Minnesota Housing, the State’s Housing Finance Agency, offers mortgage loans for first-time homebuyers with affordable interest rates. Our Minnesota Housing loans work seamlessly with down payment assistance products like those offered by the City of Minneapolis.

How To Get Started

Your first step is to apply for the mortgage loan itself. Your Mortgages Unlimited Loan Officer will review the application, your credit, etc.  They will discuss with you if you qualify, how much house you can afford, what the payments might look like, and what assistance you may qualify to receive. Click HERE to apply online (easiest) or call (651) 552-3681.

If that all looks good, you will need to submit standard loan documentation, which includes photo id, last two pay stubs, last two bank statements, and the last three years of W2’s and federal tax returns.

If that still looks good, you will be issued a Pre-Approval Letter, put in touch with a high quality Real estate Agent agent, and sent out to find your dream home.

In between the initial approval and closing on your new home, you will need to take the homebuyer education class listed next.

You do not have to have perfect credit, but you can NOT have BAD credit. All applicants must have a middle credit score of at least 640.  Next, while you are receiving assistance, you can’t buy a home with no money.  You must have at least $1,000 of your own money to put into buying the home.

Homebuyer Education

If you are a first time home buyer, this program from the City of Minneapolis, just like all first time home buyer programs requires all first time homebuyers to attend home buyer education.

There are two options:  Attend a physical 8-hour class (Home Stretch) or take an online class (Framework Classes). Click the links below for more information of the required training.

Sign up for HOME STRETCH: In-person workshop  Your first time homebuyer class can be taken in person in multiple locations throughout the state. The cost of this class is typically $25.

Sign up for FRAMEWORK: Online Education An online homebuyer education class can be started and stopped, and finished at your leisure. The cost of this training is $75. Most people take the online training.

When Your Class Is Completed: Print your Certificate of Completion and give  a copy to your Loan Officer

More Information

Contact:

Joe Metzler, Senior Loan Officer. NMLS 274132

(651) 552-3681

www.MNHomesAndLoans.com

 


Don’t believe the hype – Millennials can still buy homes

Millennials can, and still want to buy homes.

While it is true the American dream of home ownership is harder to achieve than in the past, it isn’t impossible. Young adults, more than ever in the past may be delaying home ownership because of student loan debt, and fear of the stability of their young careers. But they are still buying homes, just a few years later in life than in the past.

real1According to data from Zillow, in the 1970’s, first time home buyers on average had rented for just 2.6 years prior to buying a home, and was about 30-years old.  Today, the average first time home buyer has rented for 6-years prior to buying a home, and is three years older (33-years old).

The same data shows that in the early 1970’s, the average first time home buyer bought a home with a price 1.7 times their household income.  Today, that first home costs 2.6 times their yearly income.

Clearly this data shows that it is tougher for first time buyers to save for down payment, and to afford a home. At the same time, this lines up with other delayed aspects of adulthood from years past, including getting married later in life, starting families later in life, and having fewer children.

Just like generations past, once people start having kids, they start looking for homes to raise those kids, especially if they feel secure in their young job careers. But things have changed, many people years ago could count on right out of high school having a job they could start and stay until retirement with good benefits.  That just isn’t the case today. Another survey showed the average new buyer spent 4.5 years in their job field, and were at their current job for 3-years.

Most new home buyers still save their own money for down payment, which has become a bit harder with rising home prices, and high rents making it harder to save for a down payment, but the long held tradition of down payment help from Mom and Dad is still alive and well – and a very popular option.

Apply Online

Low mortgage rates, low down payment loans like the 3.50% down payment FHA loan, and the 3% down payment conventional loan, combined with down payment assistance programs significantly close the gap needed to buy a home.

The bottom line is there is a continued strong desire to buy among millennials.  It is just that the timelines to buy that home appear to have been pushed back a few years from generations past.

If you feel you are ready to buy in MN, WI, or SD – we can help.  Just click here to apply online.

MN first time home buyer programs


Twin Cities real estate market hits 10-yr high

Minneapolis, MN: The Minneapolis, St Paul area real estate market reached a 10-year milestones in June 2015, with signed purchase agreements rising 19.2 percent to 6,266. Last year, closed sales had increased 22% to 6,928.

Real Estate, Minnesota, Minneapolis, for sale, mortgage rates, interest rates
Get Pre-Approved Today – Click HERE to Apply Online

This is all welcome news, because the last time demand was this strong was back in June 2005, according to a release Monday from the Minneapolis Area Association of Realtors.

The June 2015 median sales price climbed 4.7% to $229,900. This puts the AVERAGE home price to within just 3.5% of the record high set back in June 2006, which was at a then record median high of $238,000. Typical price per square foot, now at $128, is about 18.5 percent below its June 2006 record high.

The local real estate market continues to be a sellers market, because of the ongoing imbalance between the supply of homes for sale, and the number of active buyers looking to buy a home.

Sellers are getting on average about 99.6% of their last list price, with large numbers of homes selling within days, with multiple offers, and over list price.

For buyers, this means you need to be fully mortgage lender pre-approved, with pre-approval letter in hand, and ready to make an offer immediately on anything you love.

 MN first time home buyer programs


How Real Estate Agents Risk their License everyday

Don’t risk your Real Estate License

Many Real Estate Agents put their license at risk on a daily basis without knowing it.  Generally this is by stepping outside of their official duties, and stepping into areas they shouldn’t.

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 are 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 agents 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.


Current State Of Mortgages and Homeownership WARNING!

This from Dave Stevens, President & CEO of the Mortgage Bankers Association:

Where We Are Today.

We are currently in the middle of a housing crisis.  That’s right…I said it.  Industry experts, economists and even consumer groups have predicted one would emerge, albeit this is not what they expected and it is certainly sooner than anticipated.

Dave Stevens - Mortgage Bankers Association
Dave Stevens – Mortgage Bankers Association

Yes, the word crisis is harsh and alarmist, but it accurately reflects the complete void of focus on housing as an opportunity by Washington policy makers, including the actions of the regulators and enforcement officials that are narrowing the credit box.  Fact – there is a shortage of affordable housing (both rental and owned) and the homeownership rate today is at its lowest point in over two decades.  Today’s environment is not encouraging credit expansion. It’s forcing lenders to be overly conservative – ultimately failing entry-level homeowners on every front.

What’s the number one issue choking off access to affordable credit? Regulating through enforcement and it’s happening on a case-by-case basis.  The guessing game for businesses to know if and when they may be penalized has produced the most defensive lending posture in years. This atmosphere of the unknown; this environment of fear and trepidation rather than an environment of constructive engagement and compliance have a steep cost. And we’re not just talking costs for compliance or production.  We’re talking costs for any mistake, even a minor one that may have no bearing on the efficacy of the loan, making lenders even more conservative in lending.  It’s impacting the willingness of lenders to take the risk even to some who would otherwise qualify for their dream to obtain a home.  The regulatory environment is failing the very borrowers policymakers set out to protect – young families, thriving generations of new Americans, first time homebuyers; all the while driving up rental costs and homeownership lags and rental demand soars.

Lenders must have clearer guidance on the rules and a better understanding of what will constitute an enforcement action.  We have made some progress working with regulators on issues such as rep and warrant, FHA defect taxonomy and the supplemental ratio, but it’s not nearly enough.

Some regulators appear to have an enforcement-first strategy, instead of providing clear rules and guidance – particularly regarding unfair, deceptive, or abusive acts or practices – UDAAP actions – which expose lenders to “regulation by enforcement action.”  Lenders are being subjected to zero-tolerance policies, but don’t have the necessary guidance to comply with some regulations.  Refusal to clarify the rules in writing by the CFPB leaves lenders in a position for massive penalties for minor mistakes.

The CFPB should be applauded for granting an enforcement delay on the TILA/RESPA Integration Disclosure rule (TRID).  With the number of stakeholders involved in home buying procedures, there will undoubtedly be problems.  In particular, the borrower could be affected in many ways should a closing date get pushed back (consider the cost of month-to-month rent or not having a place to go at all).  Industry stake holders – lenders, borrowers, vendors, sellers, title companies, etc., – need time to work through the initial issues before severe penalties compound the problem.

The mortgage lending industry has acknowledged and taken accountability for the role we played in actions that led to the meltdown.  Lenders have paid hundreds of billions in settlements. We’ve also made tremendous change in controls, compliance, and to improve the consumer experience.  Now it’s time policymakers – the vast network at the federal and state level – account for their role in the recovery.  It’s time to acknowledge the flaws in policy, corrections needed to the rules, and the impacts of going too far.

And it starts at the top.  Our President has only given two key housing speeches in his presidency, both in Phoenix. These were focused on enforcement, accountability, and dealing with foreclosure relief and refinance programs. There has been no public focus to promote new opportunities for homeownership and no program, other than the short-lived first-time homebuyer tax credit program, there has been a void in creating confidence in the housing market.

Unlike past Presidents in both parties – there has been no focus on homeownership as an opportunity. No discussion about unbanked, thin file, demographics and how that affects opportunities. No attempt to publicly build confidence in consumers’ views about homeownership.

Unless we call this what it is – a crisis – and focus on the critical role that our national leaders can play, there is no hope of traction. I worry deeply that this Administration may leave office having done less to advance homeownership than any previous administration in memory.  And the clock is running out.  There’s little time left before the next Presidential election to do anything more than public discussion, but the President can and should play a major role.

Let’s fix what needs to be fixed. Let’s change the dialogue of distrust to a dialogue of confidence. Let’s fix the rules to allow for innovative, sustainable, safe lending. Let’s end the relentless enforcement regimes. Give us the confidence to provide access to credit to more qualified borrowers at the lower and middle income levels. Reignite the economic engine of the real estate market.


Denied a mortgage loan? What to do next.

Everyone has the dream of home ownership.  You’ve been looking at homes on the internet, stopped into a few open houses, and finally spoke to a Real Estate Agent. You are very excited about owning your own home.

But unless you are paying cash, you are going to need a home mortgage loan.  Applying for a mortgage loan, no matter who you are can feel a bit overwhelming, paperwork intensive, and nerve wracking.What to do if you are denied a mortgage loan

You finally apply, provide your paperwork, and some mean nasty horrible rotten Loan Officer tells you that you are denied!

What To DO If You Are Denied For A Mortgage Loan

The first step is to find out why.  Ask your Loan officer to be very specific in explaining the why of your denial and ways to fix it for the future.

The most common reason for denial is poor credit.  There are no poor credit loans in today’s mortgage world. For most people, you will need a minimum credit score of 640. You may read of lower score possibilities, but realistically, don’t bother applying with a score under 640.

When a Loan Officer tells you that the denial was credit related, don’t just take a quick answer of “it was your credit”.  Ask them specifically what on your credit report is the issue.  Any good Loan Officer can discuss with you the credit challenges, and give direction on ways to improve credit.  I personally have coached many people that were denied today, but in just a few month, they are back and approved.

If possible, have them provide a copy of the actual credit report that you can reference.  Good free alternatives are places like CreditKarma.com, and AnnualCreditReport.com.

Lack of down payment money is right up there near the top of being a problem for many first time home buyers.  For some, there may be other options, like a no down payment VA loan available for active a former U.S. Military personal, or the no down payment USDA Rural Development loan available for more rural homes.  There may be options for down payment assistance programs too.  But for everyone, you need to have some money to be in the game.  Regardless of the program, if you have no money, you are not buying a house – even with no down payment loans or down payments assistance. At a minimum, everyone should have $3,000 IN THE BANK that they can put into the transaction. Earnest money, inspections, and appraisals are often forgotten about, but need to be paid up-front regardless of loan type. A good Loan Officer can help you search for options.

The next biggest area I see is DEBT to INCOME RATIOS. Basically this comes in two areas.  Simply trying to buy a home too expensive for your income, or having way too much debt.  The basic rule of thumb is that most people can afford about three times their yearly income in a home, as long as they don’t have too much other debt, like credit cards, car loans, and student loans. If you have a lot of debt, you’ll probably have to pay it down or look for a less expensive home.

Finding The Right Lender

I always say that 10% of the success of buying a home is the company you choose, and 90% is the Loan Officer you choose.  Most people choose very poorly, by simply talking to whoever picks up the phone at the bank, or by applying with a company who advertises all over about how quick in loan they are (get it?  🙂   Many Loan Officers have limited knowledge, don’t fully understand guidelines, and are more of an application clerk type, versus a professional Loan Officer, and may not even be aware of some programs.  Next, not every lender offers all loan products.  A great example on this one is I see a lot of people who said a credit union told them they need 20% down because they don’t offer FHA Loans. Yet I can easily offer the same person a 3.50% down FHA Loan.

On a very regular basis, I am able to provide financing to someone who was denied by another lender. This is why it is important to understand exactly why you were denied, and get a second opinion – especially if you were talking to a bank or credit union loan officer. On the other hand, I am no magician either.  If you have very poor credit, you can call every lender in the nation, and you still won’t get a loan.

Finally, don’t give up hope. For a lot of potential home buyers, just a little bit of time, and a little bit of effort can easily put you.  Paying down some debt, and fixing a few things on a credit report generally don’t happen overnight. But if you want to buy a home, follow your Loan officers advice, and together we’ll make it happen in short order.


New USDA Loans when you already own a home

USDA Rural Development Home Loan Primary Residence Guidelines

The USDA Rural Development is one of our most popular home loans for buying a home in MN, WI, and SD.

USDA Rural Development LoansBecause the program is a means tested assistance program (the assistance is no down payment), it does come with a few more quirks and wrinkles compared to other mortgage loans.

The USDA Rural Loan Program may not be used for second homes or investment properties.  Only for primary residences located in eligible areas.

Technically you can only own one home at a time with a USDA loan. However, in situations where a homeowner wants to purchase a new primary residence before their current property sells, a USDA loan MAY be possible, but proceed with extreme caution as USDA loan eligibility can be confusing and frustrating!

In order to qualify for a USDA loan when your existing home is not sold, the loan will have to be approved by both underwriting and USDA Rural Development (RD) to have met their property superiority condition which could be anyone of the following:

  • Upgrading from a manufactured home (mobile home) to a single family residence. (Restrictions apply)
  • Increase in family size which now requiring a larger home because the current home is now too small
  • Current residence is outside of a reasonable commuting distance due to employment change, relocation, etc.
  • Provided the reason is acceptable and makes sense, the home buyer then must still be able to qualify for BOTH house payments, taxes, lot rent, etc. because the existing house has not yet sold.

Upfront work and communication at the beginning with an experienced USDA Loan Officer is critical between all parties to determine if this could be considered an eligible situation for you.

For your personal scenarios, click here to get pre-qualified for a MN, WI, or SD USDA mortgage today, or call me directly at (651) 552-3681.  Note, we lend in MN, WI, and SD only.


How Mortgage Rates Change

Minneapolis, MN:  Many people believe that if you call around to enough lenders, that you will find someone offering a great deal.  The reality is that it doesn’t really work that way.  We generally say that if you call around to enough lenders, you might find the biggest liar.

Are All Lender Essentially The Same?

First understand that for all your traditional loans; FHA, VA, Fannie Mae, and Freddie Mac loans, which encompass the vast majority of all mortgage loans done in this county, every mortgage lender follows the same rules, have the same underlying costs, and set rates based on the same thing.  If my rates go up, so do theirs.  If my rates go down, so do theirs.

worth_balanceEver notice that most of the time, when purchasing the same item at Target or Walmart, the price is virtually the same thing.  Maybe just a tiny difference?  The same thing goes with mortgage loans.

Are there minor differences in mortgage companies rate?  Yes, but generally, the difference between the best and the worst on any given day is about .25%, and really only has to do with overhead, not one being able to really offer something better.

If my cost is the same as their costs, but they have to pay for advertising on all TV channels, radio stations, and all over the Internet.  If they have to pay for stadium sponsorships, and the brink and mortar buildings on every corner, but I don’t… Who do you think can then offer better deals?  Yes, it is that simple.

So What Changes Mortgage Rates

Long term fixed rate loans, like Conventional fixed rate loans and Government back VA Loans and FHA Loan lenders all set their rates based on the pricing of Mortgage Backed Securities.  These mortgage bonds are traded in real time, all day in the bond market.

This means rates or loan fees (mortgage pricing) moves constantly throughout the day, being affected by a variety of economic or political events.  The bond market most days trades in a small zone. So the mortgage rate the lender sets in the morning, is usually good all day long.  But sometimes, the bond market has bigger changes though out the day, meaning a mortgage lender could potentially change rates during the day, sometimes even multiple times in one day.

This can be very frustrating for mortgage shoppers.  You call this morning to get a mortgage quote. Quote in have, you talk to your spouse about it, calling back in the afternoon, just to get a different quote.  Sometimes this change is in your favor.  Sometime it is not.

Therefore tracking these securities in real-time is critical. When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up. Click this link to track our live mortgage rates for MN, WI, and SD.

Working with a mortgage loan officer who knows and understands the mortgage back security market, someone who can help you understand when to lock your interest rate, or if you should float your interest rate it critical.

I am one of those Loan Officers, not just your typical Loan Application Clerk.  I lend in MN, WI, and SD.


Top 100 Loan Officer 2015

Mortgages Unlimited’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 Mortgages Unlimited 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, and 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

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!

———-

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

He can be reached at (651) 552-3681


Is a Bank Better than other Mortgage Companies?

Is a Bank Better than other Mortgage Companies?

Need a Mortgage Loan?  Where do you get the best deals? Banks?  Brokers?  Direct lenders?

Minneapolis, MN:  Getting a mortgage loan feels complicated and overwhelming for many people, as they worry about getting the best mortgage deal.

ScreenShot12345Generally speaking, there are three ways to get a mortgage loan:  From a Bank or Credit Union, a Mortgage Broker, or a non-bank direct lender (also known as a correspondent lender). All three will get you a mortgage loan, but which one gives you the best deal?

Almost without fail, your best bet is with mortgage brokers and non-bank direct lenders, and your most expensive is with banks.

Why are banks usually more expensive?

It is actually really simple. All lenders get their money from the same bond market on the same day at the same time.  All lenders closing costs are virtually the same.  All lenders have the exact same base fees, and third party expenses to pass along (appraisal, credit report, state deed taxes, title company expenses, origination, processing, etc).

So if all lenders get their money from the same source, have the same basic costs, and underwrite to the same guidelines, why are they more expensive? Profit margin. Profit margin is where it is really at when comparing lenders. The bigger they are, the more they advertise, the faster you should run away. This also included big internet lenders – like the so called “Quick” one.

You see, if my wholesale cost of the loan is the same as everyone else, but I don’t have all the overhead of bank branches on every corner, and I don’t have the overhead of all the advertising they do – I can offer better deals.  It is no more complicated than that.

The other big items is that there are shopping advantages as well to not use a bank. When a customer uses a bank, they only get the bank’s loan products, that one banks rates, and generally a Loan Officer who is more than likely an unlicensed application clerk versus a fully licensed professional Loan Officer.  Non bank lenders generally have multiple wholesale lender contacts so they can shop between them for a better rates, and more product choices.

Why Brokers and direct lenders are better 

The whole concept of mortgage brokers is they are usually smaller, they can do it faster, and with less overhead.  They get a wholesale price for the money from the big banks for delivering a loan to them dramatically cheaper than the bank can do it for themselves, and that better deal is pass on to YOU!

Correspondent direct lenders are even better, as they are sort of really like a broker on steroids. These companies, unlike brokers, actually shop various lenders nationwide for final placement of your loan, but underwrite and close the loans themselves before sending it to the big banks after closing.  Because correspondent lenders do even more of the process than brokers, , many of their relationships often produce significantly better deals for the consumer.

The Bottom Line

The bottom line is that there is no one source that is always the best or cheapest for every situation. If one lender was always the cheapest, eventually, everyone would know about it, right?  The only other way most lenders can compete with one another is to somehow convince the public that they have some “secret way” of providing lower than market rates.  The market is the market and you pay for it one way or another.

Only work with a professional mortgage company where the loan officers are skilled at the mathematics and can explain it in plain English.  Don’t feel pressured, and stop looking at just rate, or just cost!  Don’t gamble with something as important as your mortgage.  LET US “DO THE MATH” by giving you our Total Cost Analysis report. 

Let us show you how you can free up a LOT of money for investments… We provide visual calculations that show how “paying off” the home, versus “financing” the home isn’t always a great idea.


Buy a MN Home for as little as $1,000

YES, you CAN buy a home with as little as $1,000homeowners

First Time Home buyer? Down payment and closing cost assistance is available in Minnesota

Lack of down payment money is the biggest problem for most people wanting to buy a house.  Mortgages Unlimited has an amazing program to help most modest income families achieve the dream.

1) Be a first time home buyer (or not owned a home in the past three years)
2) Have a 640 or higher credit score
3) For a family of one or two, make less than $82,900 a year in the metro area
For a family of three or more, make less than $95,335 a year in the metro area
4) Buy a home under $310,000 in the metro area
5) Put “at least” $1,000 of your own money into the transaction.

Of course you still have to meet basic conventional, FHA, or VA loan guidelines.

Loans available for up to 5% of purchase price for down payment and closing costs.

Learn more at http://mnhomesandloans.com/mhfa-startup-program.html

 


Think you know your credit score? You are wrong!

Minneapolis / St Paul, MN:  These days, everyone seems to know their “credit score”.  Many people subscribe to one or all  3 credit services, or get a score from a place like CreditKarma.com.

Before you get too excited about that credit score, understand that the score numbers you just received most likely was based on the “Advantage Score” model. While that IS a credit score, that is NOT the same scoring model mortgage companies use.

Mortgage Credit Score
Mortgage Credit Score

There are many different ‘types’ of credit scores.

Mortgage lenders care about how you handle mortgages, credit card companies care about how you handle credit cards. The reports these industries pull tend to be weighted towards their industry.  The Advantage score you get when you look at your score, or from your credit card statement simply is NOT the same scoring model lenders use.

Another way to look at is is think about buying a car. You tell someone you bought a new Ford. Great, but what model Ford? Did you get a Ford Focus, or was in a new Ford Truck?

Getting your credit score somewhere?? Great, what scoring model is is based on? They are generally all FICO scores, but what scoring model is it based on?? Advantage score, Beacon Score?   Typically the Advantage Score is noticeably higher than your mortgage score.

If the credit score you are looking at is from a mortgage company, then that should be accurate if any other mortgage company pulls your credit…  Or at least until something changes, and credit scores can potentially change everyday.  I’ll save that for another article…

Ultimately, the ONLY credit score that matters is the credit score your Loan Officer obtains on the day you start your mortgage application!

For most people, the score you see and get on your own, or through your credit card statement are close, and give you a ballpark idea of your lender score, but don’t be surprised when we tell you a different number.


FHA flipping rule – 90-day flip waiver eliminated

Bought a house and want to flip it?

The temporary waiver of FHA’s regulation that prohibits the use of new FHA financing to purchase single family properties that are being resold within 90 days of the previous acquisition expired on December 31, 2014.

What this means is that NO FHA lender can accept any purchase agreement dated less than 90-days from the last RECORDED title transfers,

UNLESS:

  • Properties acquired by an employer or relocation agency in connection with the relocation of an employee;
  • Re-sales by HUD itself under its Real Estate Owned (REO) program;
  • Sales by other United States Government agencies of single family properties pursuant to programs operated by these agencies;
  • Sales or properties by nonprofits approved to purchase HUD-owned single family properties at a discount with resale restrictions;
  • Sales of properties that are acquired by the seller by inheritance;
  • Sales of properties by state and federally-chartered financial institutions and government sponsored enterprises (Fannie Mae, Freddie Mac is the owner)
  • Sales of properties by local and state government agencies; and
  • Sales of properties within Presidentially Declared Disaster Areas.

So if you bought a home, fixed it up, and now want to sell it, understand that NO FHA buyer is able to enter into a purchase agreement until YOU have owned the house for at least 90-days.

They can not even sign a purchase agreement until day 91 of YOUR ownership.This isn’t a big deal in many cases, as it take a good 3-months to turn around many fixer-uppers, but just be aware of the rule.


Homeowners Insurance and Your Mortgage

Insurance helps people Obtain Credit and Home Loans

Being able to obtain credit is essential if our economy is to flourish. Without credit, most people couldn’t buy homes or cars or make other major purchases, and without demand for those products, our economic engine would stall. Without credit, most businesses couldn’t start—much less expand—their operations, and many jobs simply wouldn’t be created. homeownersWithout jobs, people wouldn’t have the money to buy goods and services. Credit improves the quality of life and makes it possible for people to obtain many goods and services sooner than would be possible if they had to pay cash for them.

How does insurance fit into the mortgage and credit system? An example will help explain. Let’s say you want to buy a house. The home costs $150,000. You only have $5,000, so you borrow $145,000 from a bank. The $145,000 loan gives the bank a financial interest in your house (called a mortgage). That is, in order to help ensure that you can pay back the $145,000, the bank wants to make sure that nothing happens to your house. What if your house burned down? The bank would lose $145,000!

When it lends you the money, then, the bank will require you to insure your house. The policy will be written so that if the house is destroyed, the bank will be paid the amount of its financial interest in the house, which will decrease as you make payments on your loan. You will receive the balance of the benefits. The insurance policy protects both you and the bank against loss. The same principle works to help people get car loans and to help businesses get money to expand. Insurance works hand in hand with credit to maintain our nation’s prosperity and standard of living.

When obtaining your new home mortgage loan, be sure to speak with a qualified independent insurance agent in MN who can shop various homeowners insurance companies to get you the best deal on the best coverage for your home and auto insurance needs.