MORTGAGE TIME FRAME

Every now and then someone calls with the most ridiculous expectations. It really doesn’t matter how wonderful you are as a borrower, some things just take time. I had a woman the other day tell me that she wouldn’t hire a loan officer unless she was guaranteed that she could close within 5 days. Truth be told, it is possible, under certain circumstances, to close a loan, start to finish, in 5 days, but trust me, that is the exception not the rule. I like to tell my clients to plan on 30 days, but to rest assured that I will do everything possible to close earlier. I would say that 10 days is about as quick as you can hope.

Let me break down the process for you:

Application/Initial Underwriting: 2 Days

Processing/Appraisal/Title Report: 3-5 Days

Underwriting: 2-3 Days

Document Preparation: 1 Day

Closing: 1 Day

I will tell you this: The most common factor that slows the process is when a borrower is unable to provide the necessary documents within a reasonable time frame. It is extremely common for me to contact a client and request an additional pay stub or bank statement only to wait as long as a week to get a response. That is why I always say, come to your initial appointment with the paperwork ready—it only makes it faster for you.

So, next time you are looking for a loan, remember to keep your expectations realistic.

Have a great weekend!

WHAT TO LOOK FOR IN A LOAN OFFICER

I was asked this morning about how you know if you have a good loan officer. Obviously the first rule is to call me. Then you know you are talking to the best. But, if you honestly must know, I figured I would share the things I look for when interviewing new Loan Officers for our company.

License. I know it seems like a no-brainer, but believe me, you would be shocked at how many people try to pose as a loan officer prior to getting a license.

• Knowledge. You don’t necessarily need someone who knows every possible detail, but there is no excuse for blatant ignorance. Think of your own job, you probably don’t know every single thing there is about your industry, but you probably know more than the average joe. Look for the same in your loan officer
• Honesty. I realize it may be hard to gage, but you need to find someone who you are confident will be honest with you. Getting a home loan can be difficult, and there are many variables that can cause problems or require changes. An honest loan officer will be up front with you about the challenges—particularly when underwriting conditions make things difficult.
• Responsive. I have some client who expect a phone call at least twice each day with updates, but most simply want to be kept updated with any changes or progress. Look for a loan officer who is quick to respond to your calls and questions.
• Descriptive. Loans can be complex, therefore, it is always a good idea to have a loan officer who can adequately explain any nuances or variances that may be applicable to your loan. If they can’t make it crystal clear for you there is a good chance that it isn’t crystal clear to them either.

When all else fails, or if you just want to skip the headaches all together, drop me a line.

Troubles at Countrywide?

They may be the nations largest mortgage lender, but that doesn’t mean that countrywide is immune from problems. By now we all know about the Sub Prime Meltdown and the apparent bursting of the Housing Bubble—every time I turn around someone is asking me about what to expect and how we got into this mess. Well, that is another story all together, and perhaps some time I will write my thoughts (HINT: Stop Blaming the Loan Officers for bad loans—if your loan rep didn’t give it to you someone else would have). What caught my attention today was the article on www.cnnmoney.com about Countrywide and their new PR campaign.

Countrywide has probably been hit the hardest with negative perceptions. Everyone in the mortgage industry, me included, has wondered aloud if Countrywide will survive. Well, apparently they are tired of everyone looking for their weaknesses. I, for one, am excited to see what kind of spin they put on the current mortgage environment. It isn’t the fault of anyone at Countrywide that home values have soared and fallen, nor is it the fault of anyone at Countrywide investors on the secondary market have slowed in the purchase of mortgage notes.

But you can’t tell me that Countrywide didn’t at least suspect something. When you are the biggest in your industry chances are you have as good an idea as anyone as to what is happening, and what to expect. The question I would like to ask someone in the Higher-ups at Countrywide is this: If you knew what was happening, why did you continue with your own loose lending practices—which, by the way, the majority of “wholesale” lenders follow like gospel—instead of trying to remedy the problems, or at least warn someone?

For those who don’t think they had some idea, why in the world would Countrywide Chairman and CEO Angelo Mozilo cash in $138 million in stock options over the last year—Before the collapse?

Maybe this can be added to the “I’m not saying . . . I’m just saying file.”

First Time Home Buyer: Income

A challenge frequently faced by First Time Home Buyers is the ability to prove sufficient income. Typically, a younger adult or couple will wait until they have their first “real” job after college. In other cases, these individuals may have waited until they receive a more stable managerial role with their existing company. In cases such as these, as soon as the increased income arrives, the individual or couple feels that it is now time to find a home. Well, they are right. As those of in my Inner Circle will tell you, 75% of those who are renting would benefit more from buying a home now rather than later.

The problem with individuals like this is that income may be hard to prove. Here are some things to keep in mind if you or someone you know is in this situation:

30 Days income is crucial to prove. In most cases, don’t plan on closing on a new home until you can prove 30 days at the higher pay level.

1. A Contract or Working Agreement is helpful. In many cases, a simple letter from your employer or HR representative will demonstrate your stability.
2. If recently graduated, expect your transcripts to be required. If you are working in a field related to your degree, it is helpful to have your transcripts as proof that you were being productive even if your income was lower.
3. Bank Statements may help. In many cases it is useful to show 12 months bank statements. In these cases the underwriter is looking for the average monthly deposits. If you are self-employed, work on commissions, or have a secondary income that is hard to prove this may help.

Understand that if you are purchasing your first home there may be a few extra hoops to jump through, but don’t let that discourage you. Every home owner had to buy their first home at some point. And I can tell you, in almost every case, it is better to get into a home earlier than later.

REMINDER: For information on my next First Time Home Buyer Seminar give me a call, or email me. As always, you can reach me at 801-256-0904 or jayhart@cottonwoodmtg.com

OPTION ARM's and Minimium Payments

In spite of all the talk of “bad loans” recently, I still see large numbers of people who can benefit from one of the Cash-Flow Mortgage programs available. Sometimes referred to as an Option Arm or a Pick-A-Pay loan, these programs can provide great opportunities for the right borrower. The problem is that for the past few years Loan Officers have been putting every possible borrower into an Option Arm and selling the benefits of the minimum payment. Not everyone should have a Pick-A-Pay loan.

The Pay Option ARM is a loan that was created to allow homeowners to have more control over their payments, and therefore over their cash flow. I have a very informative report that I have sent to my Inner Circle with detailed information about how the Option Arm loans work, and how to tell if it is right for you. If you are not a member of my Inner-Circle, email me and I will add you, then you too can have the information.

Essentially, you are given payment choices each month. Each month you have the choice between four different payment options: A Traditional 30 year payment, a 15 year payment, Interest Only, and a Minimum Payment

The most important thing to remember is that if you make the minimum payment you are actually paying less than the interest due. In other words, you are deferring interest—or adding to your loan balance. For some this sounds horrible, yet for others it is a good idea.

As a general rule, if you fall into one of the following categories it may be worth considering the possibility of the Option Arm and the minimum payment:

1. If you are in a rapidly appreciating market
2. If your income will increase substantially over the next 3-5 years
3. If you don’t anticipate staying in the home for longer than 5 years
4. If you have another place to put your money, such as an investment or debt payments.

The key is to consider the possibilities. I have several clients who have saved thousands by utilizing these loan programs—but I will be the first to tell you, it isn’t right for everyone.

For more information, drop me a line. I would love to answer any questions you may have. As always you can reach me at jayhart@cottonwoodmtg.com.