How to Shop for a home loan

Guest Blogger: Today's post is written by Sacramento Mortgage Expert, Matt Gouge.  All of his contact info and more can be found at this website: www.mattthemortgageguy.com. Thank you Matt for providing this great info for potential buyers in our Sacramento Real Estate Market.

SHOPPING FOR A HOME LOAN – The Good, the Bad, and the Ugly

The Good

Living in a world with so much technology at our fingertips has its advantages. It allows us to be more informed consumers and this can be greatly beneficial when shopping for goods and services. For most of us, the thought of one local place to buy groceries, books, or anything for that matter, is a thing of the past. Whether we are in the market for a car seat, a sliding glass door, or car insurance, we have virtually endless options. We have the ability to not only compare prices quickly and easily, but to compare quality of service as well.

The home mortgage loan is no exception. A person is able to search through a list of local lenders and can receive a number of estimates in a matter of a few hours. Even more important is the ability to read reviews from folks that have actually done business with a particular lender. If 30 people have taken the time to do an online review, chances are the lender knows what they are doing.

The Bad

Each lender may have his or her own way of presenting loan scenarios and estimates to the client.  More often than not, a client will be looking at 2 different types of documents and will have a hard time discerning which one is actually the better deal. Based on factors that vary from deal to deal, one lender may have a different view as to how to estimate closing costs. One may estimate it assuming title fee’s being split while others may estimate it with those fees being paid by the seller or with a lender credit. I’ve had many a client come to me more confused than when they started after looking at 2 or 3 loan estimates.

The Ugly

A loan estimate is purely an estimate. The numbers that appear on one lenders “Good Faith Estimate” are basically a breakdown of loan terms and costs inputted by that individual. Here is where it gets Ugly… Some lenders are so hard up for business that they just flat out lie. Sorry to have to put it so bluntly but I see it all the time. You give someone an honest, fair assessment of what a new mortgage will look like and they show you what Joe Blow had drawn up for them down the street. Joe Blow underestimates everything on his Fee Worksheet and even LEAVES OUT little things like the set up of escrow accounts in order to impress the client with his bargain mortgage. I won’t go into detail on how many ways I’ve seen deceptive estimates presented. All I will tell you is to make sure you are dealing with someone you like and trust. I’ve had clients tell me horror stories about the San Diego broker who sold them on his “great deal”… Then 3 weeks into the loan after the client had paid for appraisals and inspections, Mr. San Diego breaks the news that his company does charge a fee to process the loan. He then adds in that little $3,000 he left out to set up escrows and that little charge for something required, like title insurance.

To make a long story short, the Ugly part of loan shopping is that sometimes the best “salesman” gets the business instead of the client finding the best mortgage. A savvy borrower may be able to read between the lines and compare apples to apples on different options but I see far too many people being mislead with incorrect information with the intention of getting business.

The best way to avoid this is to find a mortgage professional that you know, like and trust. This person will be handling one of the largest financial transactions you’ll likely ever be involved in. If you want a used car salesman handling that transaction then go with the smooth talking guy who promises you the world. My bet is that you would prefer an honest and ethical professional handling the transaction.

Connecting people and homes, one loan at a time…

#MattTheMortgageGuy

916-529-7600

NMLS # 1088993

www.mattthemortgageguy.com

Thanks again Matt for your guest blog post.

Connect with Doug Reynolds Real Estate via Facebook, YouTube, and Follow his Blog.

clear skies,
Doug Reynolds
Realtor

916-494-8441

doug.reynolds@BHGhome.com 

         

www.BuyWithDoug.com

www.CollegeGlenRealEstate.com

First-time Buyers Lean On The Bank Of Mom And Dad

By Jane Hodges - Reuters

About a third of first-time buyers in 2011 got either a gift (26 percent) or a loan (7 percent) from their families to help finance their home purchases, down slightly from 2010, but consistent with assistance levels seen during the last decade, according to data from the National Association of Realtors (NAR).

But industry observers think the level of parental generosity is even higher, with some giving children money for home purchases so far in advance of a loan application that the gift isn't disclosed to lenders, or, if they've got the resources, buying homes outright for their adult kids and setting up an after-the-fact intra-family loan agreement.

In November, all-cash buys among first-timers hit a high of 13 percent, according to Guy Cecala of Bethesda, Maryland-based Inside Mortgage Finance, a mortgage industry newsletter publisher and researcher. That's up from 6 percent in 2009, when IFM first began tracking it. While the company's surveys don't ask about the source of cash, Cecala said that when first-time buyers buy outright, it's likely their parents who are purchasing on the children's behalf.

What's encouraging these all-cash purchases now? Home prices are way down - with the median price in November 2011 at just $164,200, down 3.5 percent from a year ago, according to NAR. Mortgage interest rates, too, remain at all-time lows. According to mortgage researcher HSH, the average rate on fixed 30-year loans fell steadily from 5.1 percent at the start of 2011 to 4.09 percent in December.

Many first-timers use FHA loans, requiring a 3.5 percent down payment or 10 percent down payment with poor credit, or VA loans, which require no down payment, but are eligible only to military personnel.

Indeed, in some markets, without parental help, many first-time buyers wouldn't qualify for the best rates or even a loan on the types of property for sale. To qualify for loans backed by Freddie Mac or Fannie Mae, borrowers need a 740 credit score and a hefty 20 percent down payment — or else they'll pay private mortgage insurance and additional "risk-based pricing" fees on their loan, IFM's Cecala says. As the government rethinks the role of the two mortgage giants, these tighter lending standards may be here to stay, or be tightened further.

To be sure, many baby boomers want to help. More than a fifth of them have co-signed a home loan for an adult child or given a gift or loan to help them buy, according to a September survey by Better Homes & Gardens Real Estate and Research Solutions Inc. More than half of those earning at least $75,000 said they wanted to help their children finance a home purchase.

clear skies,
Doug Reynolds
 
www.BHGshortsales.com

 

Having trouble getting approved for a mortgage ?

Some borrowers think that because their mortgage application is turned down the first time, they won’t ever be approved.  In reality, some borrowers succeed on the second or third attempt, usually with a different mortgage professional, and often several months later, after they have saved more money for a larger down payment or improved their credit score.

Making sense of the story

• Before reapplying for a mortgage, borrowers are advised to look at the reasons they were initially rejected.
• The Equal Credit Opportunities Act requires lenders to give loan applicants specific reasons in writing within 30 days of their decision.  If it’s based on a problem in the borrower’s credit report, the lender must tell the borrower the name and address of the credit agency that provided the information.
• Talking to the loan officer who denied the application to see how close the borrower was to being approved also can be helpful.  Sometimes the gap is small and could be bridged with a larger down payment or another home appraisal, for example.
• It also may be worthwhile to shop around for other lenders. 
• However, first-time buyers may need to scale back their aspirations.  One reason people get turned down for a mortgage is because they try to buy more property than they can afford based on current incomes.
• Applicants also should look at ways to strengthen their financial picture.  If a borrower’s credit is poor, paying down credit-card balances can help to increase a FICO score. 

clear skies,
Doug Reynolds
 
www.BHGshortsales.com

How to Come Up With a Game Plan for Buying a Home in the Sacramento Area

Doug Reynolds, a Sacramento Area Realtor, sits down with Erick Perpich to discuss the best way to start thinking about buying a home in the Sacramento Area. Erick Perpich is a local loan officer with Republic Mortgage, a direct lender in Folsom. Erick explains that even if your credit is bad or you don't have enough money for a down payment, it is in your best interest to talk with a loan officer to see where you are at today and come up with a game plan for moving forward and getting you into the position to buy. The game plan might only take a month or a year but there are strategies available to speed up the process. Along with that, there are some down payment assistance programs that can help certain buyers with the down payment and closing costs. Give Erick a call today to discuss your personal game plan for buying a home in the Sacramento Area.
Erick Perpich
Republic Mortgage
916-549-3577
eperpich@repmtg.com

clear skies,
Doug Reynolds
 
www.BHGshortsales.com