MortgagesUndressed

You may not need to read each word to accomplish this. You are to be watching out for gotchas. For example, a pre-payment penalty addendum.

There are so many documents at closing, they all see so legal like. It does’t make sense to read all at closing. Here are three suggestions to consider.

1- Ask for a set of documents to review a day before you are to sign. You can review them at home, even with anothers help.

2- Have your real estate agent go with you to signing. Hand them each page to look at before you review it. Note, some agents have been taught not to do this, so don’t be surprised if they won’t. It’s a liability thing. However, I have seen top producing agent’s that go to signings as a standard practice.

3- At least make sure you know the purpose of the document. A pre-payment penalty, is a pre-payment penalty irregardless of the legalese.

Congratulations if this applies to you soon. It’s fun getting that new home. Larry Cragun

This is one reason I write this blog. First, I will say I have read many of this guys articles, some are very good.

Michael Mahoney, area code 714, is a loan officer. He writes an article about second mortgages. If you were an inexperienced borrower here is how this article can mislead you: He gives you some product information. Fine. In the second paragraph he talks about fees. He references an $800 fee and says to check consumer protection. Whoopee, who is going to do that? But he so easily passed off the fact its 8 Points. Hey fella, where’s the beef? By that I mean the rest of the story. Where is the info about your local bank or credit union? The one that won’t charge any points? The one that doesn’t pick up a rebate for another bit of change. The one that probably has a lower interest rate! The one that won’t charge for an appraisal, credit report, processing fee, or other junk fees mortgage companies usually charge.

When I was a loan originator the local banks loved me, I always sent people to the local banks for their seconds. The clients loved me for doing so. Hey, it’s the right thing to do and wow, it’s good for a reputation. When our company was doing gangbuster business, if I had a loan officer do a second and make one dime on it, he or she was fired.

My advice; tell the whole story. Serve the customer. Inform your viewers about options other than those that serve yourself. For second mortgages, suggest they have other options. To not offer this is absolutely unforgivable to me.

I can hear you say, some don’t have the credit to go the route I propose. Most do and you didn’t discuss that option.

Larry Cragun

I have written about this already. Click here for the full story I wrote on June 2nd.

#1 Situation: Customer had bankrupcty discharged two years ago. This customer wants to purchase with a low down payment and wants rates competitive to Fannie Mae or Freddied Mac conventional rates.SMORT Reports the solution: FHA insured loans.

Important: You must have current good credit with no 30 day lates reported in the last 12 months.

We are performing regular surveys of agent sites. We call it the WART Report, from Website And Response Time. Those that meet our rigid criteria are posted as a 9.5 or a 10 on RealEstateUndressed.com - Check it out.

I had a whole list of things I told my wife I would do today. Unfortunately, I got blogged down with the fun I am having with this website. I hope you find it valuable. Larry Cragun

A low budget spammer is hitting the email of serious websites and blogs. This site is getreadyquote.net. My hunch is that it is a kid, using the name of humberto Cody. I expect him to be out of business soon. Please don’t go to sites like this, they sell you as a lead 15 times for 15 bucks. SeeYa humberto. Larry Cragun

I am going to describe the components of the bi-weekly mortgage plans I have seen over the years.

Concept:

Your bank account is automatically charged 1/2 a payment every two weeks. This will provide the funds for an extra payment.

The following are components have and do cause me to tell people to not enroll in these programs.

1- You pay a fee to enroll in this type of service.

2- You have a company holding your money in an account.

3- This company, not you, makes your mortgage payment.

4- You earn no interest on your money they are holding in trust.

5- You are charged a monthly fee for this service.

Sorry, this never made sense to me.

These are my two alternate recommendations. They do require you do a little work, not much really.

1- If you are married or own the home with another person, make an extra principle payment equal to 1/2 of your mortgage payment on each persons birthday.(Pretty good birthday gift I would say.)

2- Have your lender provide you an amortization chart with your mortgage components: years of amortizing, interest rate, monthly payment principle amount, and monthly payment interest amount. Each month, write two checks to your lender; a check for the normal payment and a check that is the amount of interest for the next payment. In the early years of the mortgage this second check will be a very small amount. Write the notation on the check, extra principal payment. Save these checks. Keep the chart, check off each payment you make. When you pay off the mortgage make sure the balance you have concurs with the final statement from the lender.

I personally like the second option. I think it gives great visibility to how fast you are cutting off a payment, how little it takes.

PS: After writing this I did a Google search on the topic. I note the following: There definitely are companies trying to sell this servicet. There are several other articles you can find explaining Bi-weekly in greater detail. Make it easy on yourself. Follow the advice in this article. Don’t do bi-weekly plans like these I describe.

1- Out of your current assets.

2- From a lender rebate.

3- From your home equity. (Refinance only)

4- From your seller. (Purchase only)

5- A combination of the above.

Experts - are there more?

During my lending career I began to believe that most people could borrower more money for a home than they would choose to borrow. With good or great credit, good cash reserves, strong employment, and/or a large down payment, even Fannie Mae or Freddie Mac will let you stretch their standard guidelines. Specialty lenders in search of higher returns create programs that help the non standard situation.

I write this short note to encourage you to investigate. Don’t assume you can’t have a particular home you want. There might be a way.

Now with this in mind I give you the advice given me by the father of one of my college buddies. “Be careful of what (or who) you go after, you may get it.”Thad O Yost.

Larry Cragun

Borrowers, there is no benefit in telling part truths or leaving out information. This is important when you are trying to figure out what you qualify for or what interest you can get.

A situation came to my attention last night that illustrates this. I don’t know how many times I have seen such a case.

The borrower wanted a pre-qualification letter to buy a home. He is on commission, has been for several years. He said he had good credit. He was seeking to purchase a home 0 down. Based on the above plus an approximate $90,000 annual income he qualified and got his pre-qual letter.

It was a waste of everyones time. The facts came through with tax returns and a credit report. His middle FICO score was 659 with a very recent 30 day late on his mortgage. Loans can be done with a 659, but not likely at the rate he first was quoted. Not 0 down.

Another problem was his income was $70,000 last year and only $29,000 the previous year. He now didn’t qualify based on income. The loan officer found a stated income program for him, but at a higher rate. This disturbed him.

All in all, everyone wasted their time.

Be forthcoming with all facts that might be pertinent. Don’t stretch the facts. They all come out.