MortgagesUndressed

Well, there was this loan officer in Iowa City, Iowa, so the story goes…. PS I have a married daughter living there, thus Iowa City… Now this loan officer drove a pickup. He also lived on a 45 acre parcel of land. His house was expensive so he made up for it by driving an older pickup. He thought it made him look very Iowa City.

Unlike most Iowa City folk, this loan officer had a dishonest streak in his character. He made the downpayment on his fine home by selling negative amortization ARMs without clearly explaining the neg am part.

Our loan officer made the mistake of sticking the owner of a backhoe with one of these loans.

You should see the moat around the loan officers house. Lar

Cats in our town get pretty big. (Photo taken in Issaquah by Ashley Kyser the professional photographer)

I realized today just how much the implosion of the subprime world has affected our business. Everyone is running and hiding. Few are willing to take any chances. Things that used to be easy decisions are difficult. No one at the lender level is willing to take any chances. The days of getup and go have got up and went. It reminds me of a poem: How do I know my youth is all spent? My get up and go has got up and went.

This state of affairs has important implications for you the borrower. Expect no favors and no exceptions. Additionally you should go overboard to prove how worthy you are to borrow. Give no crap to anyone asking for anything, just do it and do it right.

If you are requested to give bank statements give copies of all pages front and back.

Do it fast. Do it thoroughly, Do it all. Otherwise your loan will drag out and no one will have any sympathy for your state.

No one is moving fast so you move fast to help compensate.

Larry Cragun

MI, Mortgage Insurance is one of the most spurned part of the mortgage industry. I have lost loans because people wouldn’t pay mortgage insurance. This table might get you thinking. In many cases MI makes sense.

Photo By Doug Stremel
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Mortgages Rates are Hopping Up

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Rates are up again from last week. March’s Jobs Report came in much stronger than expected (180,000 new jobs vs. 135,000) and revisions to the past two months’ Jobs Report dropped the unemployment rate to matching the lowest level in 6 years at 4.4%! All this good labor news is bad news to mortgage bonds.

This bug just doesn’t want to be bugged on Saturday.

Buckwheats Magnificent 7 nominated article:The 10 Commandments for mortgage applicants really got me thinking. (as did all of the others of course). The number of people who have gone out and bought a car, time share, or a boat just before coming into a loan application has been more than I would have imagined.

Buckwheat said: “The following is a list of things that I see most often as a Loan Officer, that derail the process of getting approved for a mortgage loan.”

6. Tell your loan officer in advance if you plan on making a large purchase.

However he does say -

10. Do have fun.

For the guy who has to have his boat without waiting: I offer the solution - A starter boat.

Enough of this renting crap. I am going out and buy a house.

Should you rent or own? Owning is my advice. I am sure that is your preference also. Don’t get discouraged if you are not there yet. But perhaps you should grow up intead of being discouraged.

Life has a way of sobering us up doesn’t it? The sub prime mortgage implosion took away options, where being patient is the new answer. Take note, patience is part of being an adult. All too few of us like being patient.

The past programs giving 100% loans if you had a 580 credit score was irresponsible. An industry with standards lost its way. So now you have to do business the old fashioned way: prove your income, have a credit score, maybe even put some money into the purchase. (Oh Shame)

Much of my career has been using FHA 3% down programs to purchase. This is probably your best option in the future. Back then I dealt with some who hadn’t grown up. Putting 3% down seemed impossible.

If you think you are mature enough to have someone loan you a few hundred thousand dollars be also mature enough to add some skin to the game.

When people said to me I can’t save 3% I wanted to send them to the corner for an hour. Of course you can. Sacrifice or time might be required.

The people who bought homes with a 580 score and 0 down were trading maturity for wanting their popsicle before lunch. Get your priorities straight. Are you a parent or a child? Act like it. Go save some money.

Pride might keep you from getting a second job. Fear might keep you from talking to a head hunter. Lazyness might play a role. Pride, fear, lazyness are qualities of the 12 grandchildren we have under 8 years old.

So the issue probably isn’t should you rent or own. The problem is are you a child really, instead of an adult.

Larry Cragun

PS: The photo is not of one of our grandchildren.

If you go out and buy a house without researching mortgages you may be doing just that.