I’m training two new loan officers and this week I asked them to write down, as a borrower, things that they like and dislike about obtaining a mortgage. As a loan officer, you have a behind the scenes understanding of what it takes to get a loan to the closing table so you eventually lose the perspective of the borrower. You can’t un-know what you know. I wanted to grab the thoughts of these new loan officers before it was too late. Wow, did it open my eyes! They had a much longer list of dislikes than likes so let’s take a look and see what troubled them because it’s probably the same things that trouble you too!
1 – It takes too long to get a loan closed. Why?
Well, I’m sorry to have to tell you but it probably won’t get better. In the few years prior to the mortgage meltdown, many mortgage companies were closing loans in just a few short days. With the availability of subprime loans that required minimal documentation, there were few road blocks on the way to the closing table. Time has proven that there should have been some roadblocks. Maybe we wouldn’t have all the foreclosures we have on the market right now if there had been. Since that time, government involvement in the mortgage process has extended the time it takes to close a loan because of the additional disclosure requirements. And, I would not be surprised to see even more intervention. But if you step back and consider what you are doing, is this really a bad thing? For most people, the purchase of a home is the single largest investment that they will ever make. Plus, this is where you will be living! Is it not worth taking the time to have the proper financing in place and being patient while the necessary processes are completed? I know the wait is frustrating because of the excitement of getting into a new home. But it’s worth the wait. You don’t want to become a statistic. Be patient, knowing that your loan officer is doing everything to complete the process legally, with your best interest in mind.
2 – Why do I have to provide all this information? It feels like an invasion of privacy.
I guess the best way to address this one is to simply ask the question – What would you want to see before loaning money to someone to buy a house? Sometimes we look at lenders as if they are inanimate objects and we fail to see that there are real people investing their savings or retirement plans into the stock of the bank. If the bank makes bad decisions, some retired factory worker in North Carolina may see their investment account dwindle. Again with the mortgage meltdown, I hope that everyone has come to the realization that much thought should go into the approval of mortgage loans. We don’t want more foreclosures. But not just for the sake of the homeowner or the bank investors but also we have now seen that the entire world economy is affected. The underwriter that approves your loan application never has the opportunity to meet you or form any subjective opinions of your desire or willingness to repay the debt. They only have a stack of papers that tell your story. The more information that you can provide, the more complete the story of ‘you’ becomes. If you have full intentions of repaying the loan and you are credit worthy, be prepared to provide enough information to prove it. And remember, the underwriter’s job is on the line. You will help yourself by helping them.
3 – Why don’t you ask for everything you need at once so you don’t have to come back to me later for more?
Oh, if only it was that simple! With every file, there is basic information that is needed. Pay stubs, W-2’s, tax returns and bank statements will always be asked for. But the mortgage process is a work in progress. It’s a project that starts with the basics and then evolves and grows until it becomes a closed loan. As the facts are pulled together, the appraisal is received and the underwriter begins to put the pieces of the puzzle together, it’s not unusual to be asked to provide additional information. Remember, the underwriter is trying to get a complete understanding of the project without the benefit of a full conversation with you.
These basic complaints about the mortgage process are fair concerns but with a better understanding of what it takes to get to the closing table, it should help to relieve the stress and irritation while waiting for your special day. You will be collecting the keys to your new home before you know it. Just be as cooperative and patient as possible. And always start with an experienced loan officer that understands how to guide you along the way.
To work with an experienced loan officer, call Jamie Harrington at United Carolina Group – Mortgage Planners at 828-632-0650 or email jamie@unitedcarolinagroup.com. With 14 years in the mortgage industry, you will be in good hands. Check out the website at www.UnitedCarolinaGroup.com. Join Jamie on Facebook or follow her on Twitter @jamieth1.
Tuesday, September 22, 2009
Tuesday, September 8, 2009
Important Steps and Questions When Choosing a Mortgage Banker
4 Steps for Choosing a Mortgage Banker And
7 Important Questions to Ask After You Make Your Choice
Finding your first home should be a wonderful and memorable experience. But sometimes in the midst of looking at houses, deciding on paint colors and checking out the neighborhood, finding a mortgage banker to get you to the closing table becomes an afterthought. Ok, maybe we don’t hold a candle to the excitement of choosing between ‘misty blue’ or ‘steely gray’ but our part in this buying experience will linger long past the time that you’ve painted those walls. The right person and mortgage product can have a major influence on how much you enjoy homeownership for years to come. When should this decision be made? - BEFORE you find a house!
So how can you know that you are dealing with someone that can lead you through the mortgage process, especially if it’s something you haven’t done before? I recommend you do some research and your first questions are not necessarily directed to the mortgage banker.
1 - Start by talking to friends and family members that are homeowners and have recently been through the home buying experience. Notice the word RECENT. The mortgage industry has changed. With government involvement after the mortgage meltdown, anyone that obtained a mortgage more than 2 or 3 years ago is surprised at the amount of time involved and how much more documentation is required now. Find out the name of the company they used for their mortgage and what kind of experience they had. If there were any snags, which there will be, were they informed of what was happening? Don’t expect it to be as simple as signing a few documents but it shouldn’t be a nightmare either.
2 – Once you have received a recommendation from people that you know and trust, check out the mortgage company online through any regulatory agencies and the company’s own website. Also do a Google search of the company and review any articles written by or about the company or its principals. Then call the mortgage banker and ask for an appointment. Be sure to find out what you will need to bring with you. In my office, we like to gather some preliminary information by phone in order to obtain a credit report so that we can be better prepared for your appointment. In many cases, we are able to determine if an appointment is necessary or if credit repair is in order first.
3 – Go prepared for your appointment. Be prepared with documentation for your mortgage banker but also be prepared with questions for them. Questions such as:
a. Which type of loan is best for you and your situation? Having the right loan is far more important than the cheapest rate. A bad loan with a low rate is still a bad loan.
b. How much are you approved for so you'll know the price range of homes to look at? Nothing is more disappointing than to find the house you want and then find out it’s outside your price range. Unfortunately, I have seen both homeowners and realtors try to force a situation that could have been avoided by getting approved prior to house shopping.
c. How much are your closing costs and what makes up these costs? Be sure that you receive a good faith estimate that outlines the total cost.
d. What is the interest rate and when do you lock in? Be cautious that you are not teased with a lower rate. Sometimes rates that are below market rate include discount fees.
e. Is there a pre-payment penalty if the homeowner decides to pay off their loan early or make extra payments? Most loans no longer have prepayment penalties but ask anyway.
f. Is the rate fixed or variable? Rates are historically low so it is only in rare situations that a variable rate is a better choice.
g. How much time is needed to close the loan? Understand that the mortgage banker has many levels of due diligence in the loan approval process and there are many people involved in that process. Your mortgage banker’s role is similar to that of an orchestra conductor. She does not personally do everything involved but must orchestrate the process so that it all comes together perfectly. Not an easy task!
4 – Once you have found someone that you are comfortable working with and you have a level of trust, you should follow their lead. A good mortgage banker will take you from application to the closing table with the least amount of stress possible. But set your own expectations as well. I often find home buyers that want the process to be as simple as buying a car. But remember, this may be the single most expensive investment that you will ever make. You want it done right, even if it takes a little longer or requires some active participation on your part. It’s worth it in the long run.
As you can see, doing research ahead of time to find an experienced mortgage banker that has a good standing in the community and a good reputation is critical to the home buying process. So do your homework and set reasonable expectations. The home buying process is not as simple as it used to be and having the guidance of someone that’s been in the business for many years will make all the difference on closing day.
Jamie Harrington is a mortgage banker with United Carolina Group in Taylorsville, NC and has been in business for 14 years providing residential and commercial mortgages. She can be reached at 828-632-0650 or email her at jamie@UnitedCarolinaGroup.com. Check out the company website at www.UnitedCarolinaGroup.com. Follow her on Facebook and Twitter @jamieth1.
7 Important Questions to Ask After You Make Your Choice
Finding your first home should be a wonderful and memorable experience. But sometimes in the midst of looking at houses, deciding on paint colors and checking out the neighborhood, finding a mortgage banker to get you to the closing table becomes an afterthought. Ok, maybe we don’t hold a candle to the excitement of choosing between ‘misty blue’ or ‘steely gray’ but our part in this buying experience will linger long past the time that you’ve painted those walls. The right person and mortgage product can have a major influence on how much you enjoy homeownership for years to come. When should this decision be made? - BEFORE you find a house!
So how can you know that you are dealing with someone that can lead you through the mortgage process, especially if it’s something you haven’t done before? I recommend you do some research and your first questions are not necessarily directed to the mortgage banker.
1 - Start by talking to friends and family members that are homeowners and have recently been through the home buying experience. Notice the word RECENT. The mortgage industry has changed. With government involvement after the mortgage meltdown, anyone that obtained a mortgage more than 2 or 3 years ago is surprised at the amount of time involved and how much more documentation is required now. Find out the name of the company they used for their mortgage and what kind of experience they had. If there were any snags, which there will be, were they informed of what was happening? Don’t expect it to be as simple as signing a few documents but it shouldn’t be a nightmare either.
2 – Once you have received a recommendation from people that you know and trust, check out the mortgage company online through any regulatory agencies and the company’s own website. Also do a Google search of the company and review any articles written by or about the company or its principals. Then call the mortgage banker and ask for an appointment. Be sure to find out what you will need to bring with you. In my office, we like to gather some preliminary information by phone in order to obtain a credit report so that we can be better prepared for your appointment. In many cases, we are able to determine if an appointment is necessary or if credit repair is in order first.
3 – Go prepared for your appointment. Be prepared with documentation for your mortgage banker but also be prepared with questions for them. Questions such as:
a. Which type of loan is best for you and your situation? Having the right loan is far more important than the cheapest rate. A bad loan with a low rate is still a bad loan.
b. How much are you approved for so you'll know the price range of homes to look at? Nothing is more disappointing than to find the house you want and then find out it’s outside your price range. Unfortunately, I have seen both homeowners and realtors try to force a situation that could have been avoided by getting approved prior to house shopping.
c. How much are your closing costs and what makes up these costs? Be sure that you receive a good faith estimate that outlines the total cost.
d. What is the interest rate and when do you lock in? Be cautious that you are not teased with a lower rate. Sometimes rates that are below market rate include discount fees.
e. Is there a pre-payment penalty if the homeowner decides to pay off their loan early or make extra payments? Most loans no longer have prepayment penalties but ask anyway.
f. Is the rate fixed or variable? Rates are historically low so it is only in rare situations that a variable rate is a better choice.
g. How much time is needed to close the loan? Understand that the mortgage banker has many levels of due diligence in the loan approval process and there are many people involved in that process. Your mortgage banker’s role is similar to that of an orchestra conductor. She does not personally do everything involved but must orchestrate the process so that it all comes together perfectly. Not an easy task!
4 – Once you have found someone that you are comfortable working with and you have a level of trust, you should follow their lead. A good mortgage banker will take you from application to the closing table with the least amount of stress possible. But set your own expectations as well. I often find home buyers that want the process to be as simple as buying a car. But remember, this may be the single most expensive investment that you will ever make. You want it done right, even if it takes a little longer or requires some active participation on your part. It’s worth it in the long run.
As you can see, doing research ahead of time to find an experienced mortgage banker that has a good standing in the community and a good reputation is critical to the home buying process. So do your homework and set reasonable expectations. The home buying process is not as simple as it used to be and having the guidance of someone that’s been in the business for many years will make all the difference on closing day.
Jamie Harrington is a mortgage banker with United Carolina Group in Taylorsville, NC and has been in business for 14 years providing residential and commercial mortgages. She can be reached at 828-632-0650 or email her at jamie@UnitedCarolinaGroup.com. Check out the company website at www.UnitedCarolinaGroup.com. Follow her on Facebook and Twitter @jamieth1.
Tuesday, September 1, 2009
Top Six Questions to Ask BEFORE Submitting Offers on Commercial Properties
Top Six Questions to Ask BEFORE Submitting Offers on Commercial Properties
If the answer is NO to 2 or more of these questions, you DON’T have a deal.
Have you ever spent time on deals that did not have a chance of closing, but you didn’t know it? Let me share with you six important questions to ask before you submit an offer on commercial property. These very basic questions can help you avoid spending time on dead deals that will drain your time, energy, money and will ultimately destroy your commercial real estate business.
1. Does the buyer have good credit?
OK, you probably don’t need me to tell you that times have changed and no area of real estate or the economy is excluded. In times past, your primary borrower’s credit would not necessarily make or break a deal because the property qualified on its own merit. If it was a good property that fit the program guidelines and you could show cash flow, you were good to go! Well, that’s all over now. Not only does the property need to qualify but now your borrowers do as well. If you have a primary borrower with very low credit scores, it will be difficult, if not impossible to get to the closing table. For many quality loans, a score of 680 is required but 700+ is preferred. I know this can be difficult for many investors because they typically do not have high scores due to credit volume. But, I can help you with that too. Be sure to ask about my credit repair service. We work with a law firm that has demonstrated great results for the past 18 years in credit repair. Be sure to ask the question – what is your credit score?
2. Does the buyer have down payment money?
We have had 100% no doc loan programs in the past for commercial properties, similar to what you have seen with residential. They’re gone, probably never to return again. The amount of down payment needed will vary depending on the property type and the loan program. For example, SBA can go 90% in most cases, quality, conventional financing is typically 80%, bridge loans can go 75-80% and hard money is around 65%. These are general guidelines so be sure to give me a call for more specifics. I’ll be glad to review your project and let you know what can be done. The point is, if someone is applying for a high loan to value, especially if its non-owner occupied, it probably won’t go through. Be sure to ask for specifics concerning their loan approval.
3. Does the buyer have sufficient, documented experience?
This isn’t necessarily something new but certainly something for you to ask your prospective buyers. If they are purchasing multi-family properties and they have never owned this type of property before, it will affect loan approval and/or loan to value. Also, if the property is out of state or not in close proximity to the buyer, you may have some big problems with rookie investors. As for owner-occupied commercial, experience or training in their line of work is also critical.
4. Does the buyer have sufficient, documented net worth?
Let your buyers know that they will need to provide up to date financial statements, typically within 90 days. Not only are lenders looking for experience but they are also looking for net worth to weather the storms. In many cases, the lender wants to see a net worth equal to the amount of the loan. Also, if the down payment will wipe out liquidity, you will have problems making it to the closing table.
5. Can your buyer document income with full tax returns?
As previously mentioned, your buyer must have down payment money. But they must also be able to document their income with full tax returns for owner occupied commercial properties. For investment properties, full financial statements on the property and up to date rent rolls will be required. If you are listing the property, have these things on hand and be sure to ask the seller to update you with this information as it becomes available. It will save you and your buyer a lot of time when they are working through the loan approval.
6. Is your buyer cooperative, respectful and willing to accept that today’s lending environment has changed?
I know. All of your buyers are very nice people. But, are they up to date with the fact that things aren’t what they used to be. I talk to borrowers every day that are accustomed to walking into their local bank and walking out with the funds they need to buy the next property or do the next big deal. They are angry and resentful that things are not as they used to be. Or, they didn’t know this was happening and are shocked and disappointed. Well, many banks are not funding at all or they have limited their risk in certain property types and can no longer meet the needs of their borrowers. Unfortunately, the banks are reluctant to turn down their good customers for fear of losing them to another banking institution. So, your loan approval process will drag on forever and a day, never to close! Help your buyers understand that their banker hasn’t turned their back on them for personal reasons but because they just absolutely cannot fund the deal right now and it may be a while before they can. This is not a buyer’s market. This is a lender’s market! As a commercial lender, we can close the deal and not damage the bank’s relationship with their customer. So, don’t let a buyer slip through your fingers because their bank won’t close the loan. Give me a call and let’s see if we can get them to the closing table.
I hope you have found this information helpful. It is not all inclusive but certainly gives you a good start before you submit a contract and tie up a property with a buyer that cannot come to the closing table. Please feel free to call me with any scenarios. And remember, as a branch of one of the largest correspondent lenders in the country, if we can’t do it, it probably can’t be done so let us help you avoid wasting time on a lost cause. I’m here to help you.
Jamie Harrington
United Carolina Group, Inc.
340 NC Highway 16 South
Taylorsville, NC 28681
jamie@unitedcarolinagroup.com
http://www.unitedcarolinagroup.com/
828-632-0650
Toll free - 888-538-4663
See our other blogs http://www.100dayswithJesus.blogspot.com/ and http://www.allthingspossible1926.blogspot.com/.
If the answer is NO to 2 or more of these questions, you DON’T have a deal.
Have you ever spent time on deals that did not have a chance of closing, but you didn’t know it? Let me share with you six important questions to ask before you submit an offer on commercial property. These very basic questions can help you avoid spending time on dead deals that will drain your time, energy, money and will ultimately destroy your commercial real estate business.
1. Does the buyer have good credit?
OK, you probably don’t need me to tell you that times have changed and no area of real estate or the economy is excluded. In times past, your primary borrower’s credit would not necessarily make or break a deal because the property qualified on its own merit. If it was a good property that fit the program guidelines and you could show cash flow, you were good to go! Well, that’s all over now. Not only does the property need to qualify but now your borrowers do as well. If you have a primary borrower with very low credit scores, it will be difficult, if not impossible to get to the closing table. For many quality loans, a score of 680 is required but 700+ is preferred. I know this can be difficult for many investors because they typically do not have high scores due to credit volume. But, I can help you with that too. Be sure to ask about my credit repair service. We work with a law firm that has demonstrated great results for the past 18 years in credit repair. Be sure to ask the question – what is your credit score?
2. Does the buyer have down payment money?
We have had 100% no doc loan programs in the past for commercial properties, similar to what you have seen with residential. They’re gone, probably never to return again. The amount of down payment needed will vary depending on the property type and the loan program. For example, SBA can go 90% in most cases, quality, conventional financing is typically 80%, bridge loans can go 75-80% and hard money is around 65%. These are general guidelines so be sure to give me a call for more specifics. I’ll be glad to review your project and let you know what can be done. The point is, if someone is applying for a high loan to value, especially if its non-owner occupied, it probably won’t go through. Be sure to ask for specifics concerning their loan approval.
3. Does the buyer have sufficient, documented experience?
This isn’t necessarily something new but certainly something for you to ask your prospective buyers. If they are purchasing multi-family properties and they have never owned this type of property before, it will affect loan approval and/or loan to value. Also, if the property is out of state or not in close proximity to the buyer, you may have some big problems with rookie investors. As for owner-occupied commercial, experience or training in their line of work is also critical.
4. Does the buyer have sufficient, documented net worth?
Let your buyers know that they will need to provide up to date financial statements, typically within 90 days. Not only are lenders looking for experience but they are also looking for net worth to weather the storms. In many cases, the lender wants to see a net worth equal to the amount of the loan. Also, if the down payment will wipe out liquidity, you will have problems making it to the closing table.
5. Can your buyer document income with full tax returns?
As previously mentioned, your buyer must have down payment money. But they must also be able to document their income with full tax returns for owner occupied commercial properties. For investment properties, full financial statements on the property and up to date rent rolls will be required. If you are listing the property, have these things on hand and be sure to ask the seller to update you with this information as it becomes available. It will save you and your buyer a lot of time when they are working through the loan approval.
6. Is your buyer cooperative, respectful and willing to accept that today’s lending environment has changed?
I know. All of your buyers are very nice people. But, are they up to date with the fact that things aren’t what they used to be. I talk to borrowers every day that are accustomed to walking into their local bank and walking out with the funds they need to buy the next property or do the next big deal. They are angry and resentful that things are not as they used to be. Or, they didn’t know this was happening and are shocked and disappointed. Well, many banks are not funding at all or they have limited their risk in certain property types and can no longer meet the needs of their borrowers. Unfortunately, the banks are reluctant to turn down their good customers for fear of losing them to another banking institution. So, your loan approval process will drag on forever and a day, never to close! Help your buyers understand that their banker hasn’t turned their back on them for personal reasons but because they just absolutely cannot fund the deal right now and it may be a while before they can. This is not a buyer’s market. This is a lender’s market! As a commercial lender, we can close the deal and not damage the bank’s relationship with their customer. So, don’t let a buyer slip through your fingers because their bank won’t close the loan. Give me a call and let’s see if we can get them to the closing table.
I hope you have found this information helpful. It is not all inclusive but certainly gives you a good start before you submit a contract and tie up a property with a buyer that cannot come to the closing table. Please feel free to call me with any scenarios. And remember, as a branch of one of the largest correspondent lenders in the country, if we can’t do it, it probably can’t be done so let us help you avoid wasting time on a lost cause. I’m here to help you.
Jamie Harrington
United Carolina Group, Inc.
340 NC Highway 16 South
Taylorsville, NC 28681
jamie@unitedcarolinagroup.com
http://www.unitedcarolinagroup.com/
828-632-0650
Toll free - 888-538-4663
See our other blogs http://www.100dayswithJesus.blogspot.com/ and http://www.allthingspossible1926.blogspot.com/.
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