Posts Tagged ‘Loan officer’

Tales of a Home Buyer – part 5

June 7, 2011

Written by Shawn DeVries

My Loan Officer now took my file (all 7,000 pages at this point) and submitted it to the underwriter for them to review and verify.  I was feeling a little more confident at this point that the loan would go through smoothly.  However, the first part of this process is not just for the underwriter to approve the loan, but to also to gather more information (called conditions) if needed to support their decision.  It’s kind of like the kid on the playground who says, “Oh yeah? Prove it!” when you say you can do a handstand or something else you can no longer do at age 39.  (There’s a whole other story there.  Don’t ask.)

I am happy to report; my loan was approved by the underwriter with minimal conditions.  Those were submitted and my Loan Officer and Title Agent were soon given the all clear sign to get the final documents ready for the closing.  If you think the papers you signed for your application were excessive, you haven’t seen anything yet.  Some of the documents are the same ones you signed for the application.  You get the privilege of signing those again.  Others are new forms that detail your loan and how you will repay it.  Then there are others that give you important information about the whole transaction, and then even more that verify you were given that information.  As you may have guessed, there were a couple politicians and lawyers involved in determining the process for buying (or even refinancing) a home.  I highly suggest a big breakfast before and a hand massage after the closing.

The day of my closing seemed to never come.  The dream of owning my own home was finally here after almost 3 years of planning and hard work.  The moment the keys to the front door were placed into my hand was, as they say, priceless.  Owning a home is not just the purchase of piece of property.  A home is where you raise a family, share memories, retreat from the world.  It is an investment unlike any other.  Stocks and bonds can never hold the emotional ties that a house does.  A home is not just brick and mortar; it is a part of who you are.

We, at Awareness Home Funding, have always said we had one of the best careers there is.  It is a high honor to help someone with the most significant transaction in their lives.  We’ve been through the process – not just as loan officers and processors, but as home owners ourselves.  We haven’t forgotten the feelings and emotions attached to the address.  I’ve shared my story, and you have (or will have) your own.  The point in sharing mine is that we understand, completely, and are here to help you with compassion and expertise.  We’d love to be a part of your unique story and happy ever ending.

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Tales of a Home Buyer – part 4

May 26, 2011

Written by Shawn DeVries

After getting the purchase agreement signed I again pulled the needed documents for my Loan Officer.  (Yes, all 4,000 pages because 3 months had passed and updated information was needed.  We really do understand what buyers are feeling.) My information was entered into that program again that analyzes the data and based on preset criteria makes a decision on whether or not to approve my loan.  This “little” program can really freak you out sometimes, and all for no apparent reason.  

Ironically the same feelings can occur when you are refinancing your home.  These transactions are big deals and are a significant portion of your personal financial status.  It is no surprise that a borrower will feel some angst that is in direct proportion to their emotional investment to the home.  Highly emotional people will be highly invested into the process.  (I would like to say at this point that in case you have not guessed, I am a passionate person.  My mom will probably describe me in other words, but let’s not get her anymore involved than she already is, okay?)  Fortunately, these results came back just fine too on my loan.   

The next part was to develop my case in order for my Loan Officer to submit my file to an underwriter.  At this point in the home buying process your lender has gotten to know you fairly well.  They understand your financial situation and know what your goals and dreams are.  At least your lender should want this home for you as badly as you do.  If not, find out why.  The underwriter however does not know you.  All they have in front of them are numbers to compare and analyze.  The documents you submit need to tell your story for you.  Share what you need to support their decision so they see you as a low credit risk. 

Shortly after my offer was accepted and the paperwork fun began, I had a full inspection of the home done.  I was relieved to know there were no major issues to resolve or problems to fix.  For a home that was over 45 years old it was in amazing condition.  Getting an inspection is a crucial step in buying a home.  You want an expert without emotional ties to give you an unbiased opinion of what you are buying.  Follow them on the inspection.  Look at what they are looking at, poke where they poke and ask lots of questions.  A good inspector will tell you what needs attention and what is good with the house.  They should be able to also tell you how serious an issue is.  Telling you your furnace is getting old isn’t very helpful.  Letting you know the average life expectancy of a furnace and verifying the age of your unit is helpful.  Letting you know where your unit is beginning to show signs of wear is also beneficial.  Take good notes while on the inspection, but also get their findings and recommendations in writing.

Title work is another major piece in the process.  The title agent confirms that there are no liens against the property that would prevent the house from being sold.  It also confirms who the rightful owner(s) currently is (are), that property taxes are current, and prepares the paperwork so that there is a smooth transfer of ownership (among many other steps).  Title agents are also a great partner to have when buying a home from a trust (like I did), out of a foreclosure or short sale or any other transaction that may involve a bit more documentation.

The third significant step that happens at this point is having your home appraised.  Your lender wants to know the true market value of the home you are buying.  This doesn’t mean they are checking on how well you negotiated and if you got a good deal.  They are looking to protect their investment in you.  This house will be the collateral on the loan.  A lender does not want to lend more than what the property is worth.

After a slow start in finding my dream home, the loan process went very smoothly.  Supporting financial documents?  Check.  Good inspection?  Check.  Appropriately appraised home?  Check.  Title clear and without liens?  Check and check again.

Tales of a Home Buyer – part 1

May 11, 2011

Written by Shawn DeVries

Let me start by saying that this was not my first time.  Not only have I purchased a home before, but I have obviously been on the selling side of the process.  I have experienced a refinance and even rented for a period in my life.  I now work in the lending industry and know the process of buying a home and what to expect.  Yet, I still experienced the same stress, fear, anxiety, worry, excitement, joy, anticipation and ultimate relief that every other home buyer and owner experiences when going through this process.  My emotional range may have something to do with me doing this as a single buyer this time, but I felt it all just the same.

If you are considering purchasing a home, you may wonder just what this journey is all about.  I thought you might like to know.  If you fully understand this process please don’t disregard this series, for I know you will find warm memories and at the very least some great humor as I relate my story to you.

My story really begins nearly three years ago.  After a divorce I relocated back home to start my life over again.  Let me set the stage very clearly by adding that “moving home” was taken quite literally by moving back into my parent’s house.  Oh yeah, I did it.  God bless my parents, for despite their honest intentions and good will, I really don’t think either of us knew what this would all entail.  Most of my belongings were packed into storage with the remaining pieces finding basement corners and emptied closets.  I was prepared for this journey to start over to take some time, but not quite this much time.  Let the fun begin.  Oh, did I mention I have two children in tow?  (I told you my story would have humor.  Ha!)

Fast forward now through the past three years as I find a new career, pay off debt, and save some money all in preparation of buying my own home.  When January of this year finally came, I was ready to go home shopping!  I thought this day would never come.  I knew to take care of my credit over this time and felt it was in great shape.  I had money set aside for the down payment, plus some for reserves.  I had crunched the numbers and knew not only what I could afford, but what I wanted to afford.  Yes, I am a little anal about details sometimes, but I was preparing to buy a home and I wanted no surprises.

Knowing that the first step in buying a home is to get pre-approved I started by gathering my documents (yes all seemingly 4,000 of them) and verifying the information (just short of the blood work) for my Loan Officer as he prepared to pull my credit report.  Despite having a good clue of what to expect, that 15 seconds between him hitting “submit” and seeing the actual report can feel like eternity.  What are my scores?  Did I really behave?  Will that oops from 5 years ago show up now?  What surprises will he find?  Oh please, oh please let my score be above that golden 640 so that I can shop for a house.  See?  Even people who work for lenders have real emotions and understand the angst our clients endure.

Well the report appeared.  Great scores, good behavior paid off, no glaring marks, no surprises, and above the benchmark score needed.  Whew!  My information was then entered into a program that analyzes the data and based on preset criteria makes a decision on whether or not I could be approved for a loan.  However to the borrower the answers feel like: go away you are only kidding yourself; we had better have someone else take a look at this because we’re not so sure; or yeah, we can do that… provided nothing weird happens.  I was relieved to learn that my information was approved.  My pre-approval was then written and off I went to find my house.  This would be a snap.

What is an APR and What did it do to my Rate?

March 10, 2011

After discussing some options and various programs with your Loan Officer you reach a plan that works for your situation.  You are satisfied with your interest rate and then you are handed that one piece of paper that shows in large, bold-faced type a number that is not what you recall discussing and the words, “Annual Percentage Rate” next to it.  Where did this number come from?  Did my interest rate change?  What will this do to my payment?

If you know nothing else about home loans and borrowing money, you understand that there is a cost associated with the money you are borrowing, specifically your interest rate.  However when presented with a new percentage and the words Annual Percentage Rate (or APR) next to it, you are left with more questions than answers.  Let us explain.

The interest rate is the cost percentage used to calculate your monthly payment.  However, there are other fees and charges associated with the set-up and origination of a loan.  The APR takes these fees and charges into account and provides the consumer with an effective rate (or total cost) of their loan expressed as a percentage.  The intent of the APR is for consumers to be able to compare competing lenders and various loan programs.

Lenders are required by law to disclose the APR to the borrower within 3 days of applying for a mortgage loan. In late 2008 further regulations were passed (effective in 2010) stating that if the APR changed by more than .125% from this initial disclosure on the Good Faith Estimate (GFE), the lender must re-disclose this information to borrower and wait another three business days before closing the loan.

The APR does not change your interest rate; rather it clarifies the true cost of your loan.  It generally includes points, origination fees, mortgage insurance and document prep fees.  It is not however, how your payments are calculated.  Your payments are still based on the interest rate you discussed with your loan officer.  We hope this helps.

A Doctor, A Loan Originator & a Client…

November 17, 2010

What do a doctor and a mortgage loan originator have in common?  No, this isn’t some riddle solved by a humorous response, this is a serious question. 

We have grown accustomed to asking for referrals when it comes to our medical professionals.  Whom we choose to trust with our medical welfare and that of our families often receives rather intense scrutiny.  We may start with a referral from a trusted source, but we often keep going with some research into patient comments, legal challenges and valid licensing.  All of these are good steps to take when you need to trust someone else with help in managing your health.

Yet, how much time do we spend investigating the person who will be helping us with perhaps the single most important transaction in our lives – the purchase of a home (not to mention a refinance)?  Some consumers will hold due diligence in this matter, but more often than not we are swayed by the suggestion of advertisements.  Now don’t get us wrong, marketing has a specific use and place.  But when you need to provide someone with a significant amount of personal and financial information, shouldn’t you do a little checking first?

Let’s go back to the initial question of what a doctor and mortgage loan officer have in common.  Doctors have long since taken the Hippocratic oath upon receiving their degrees.  Believed to have been originally written by Hippocrates, a doctor recites this oath promising to uphold and respect the profession they are entering, the assumed authority given and for the people they will help.  Doctors promise to be accountable for their actions and to maintain an air of humility in a continuing desire to teach and be teachable.  A physician also promises to act in the best interest of their patients by doing what is best for the patient, guarding their privacy and understanding there is more involved than just the specific medical situation at hand.  In a matter of speaking, Mortgage loan originators now have the same set of standards too.

The SAFE Act of 2008 (Secure And Fair Enforcement for Mortgage Licensing Act of 2008) was developed “in order to increase uniformity, reduce regulatory burden, enhance consumer protection and reduce fraud”.  All of the items mentioned above that a doctor adheres to in the Hippocratic Oath can also be said of reputable mortgage loan originators.  Through the National Mortgage Licensing System (NMLS) uniform license applications, requirements and testing have been put into place.  This is actually an advantageous move for loan originators and consumers alike.  In the same way that you can confirm information about your doctor through state Department of Community Health websites, information about your loan originator can be confirmed through the National Mortgage Licensing System and Registry website.

Does your mortgage loan originator respect their profession and the authority they have been given? 

Does your mortgage loan originator respect you?

Is your mortgage loan originator accountable for their actions?

Are they trustworthy and reliable?

Does your mortgage loan originator have a teachable spirit – both to help you understand your loan and to learn more themselves?

Does your mortgage loan originator act in your best interest?

Does your mortgage loan originator respect the confidentiality of your personal information?

Does your mortgage loan originator understand your personal goals and that you are much more that just a set of figures?

They should.  Expect more, and use a mortgage loan originator who is committed to working for you.

You Say it Best

April 27, 2010

“After comparing quotes from 3 mortgage companies, we chose Awareness.  Not only were their fees substantially less, they provided us with great service.  In order to get our home we needed them to work with a tight time crunch.  They were friendly and very easy to talk to, gave us options, and answered all our questions.  When they donated $250 to our church, we were pleased to see how much they care about the community.”  –Carrie

“My mortgage officer at Awareness Home Funding was there for us, answering questions and making sure things ran smoothly all the way through our closing.”  -Lisa

Have you ever watched a commercial where a product or service was given glowing endorsements and wondered if the actor or celebrity was really a satisfied customer?  While the ad creates interest does it instill trust?  Now what if your friend, relative, or co-worker told you about a company and the service they provided.  You would probably be inclined to believe the endorsement.  Why?  Trust.  We trust those we have a relationship with.  We trust those who are like us, and view the world much the same way we do.

This is why we want to share what others have to say about us.  We could just create a bunch of flowery marketing pieces, but unless they share real sentiment it doesn’t carry real value.

We strive to give you our best, to be honest, to work to meet your goals and to keep your interests in front.  We want you to feel comfortable referring your friends, relatives, co-workers, and charity supporters to us.  Growing our business by referrals means we can continue to give back to the communities we serve.  Referrals mean money won’t be spent on elaborate ad campaigns or towering corporate offices.  Referrals mean more $250 donations will be made to your favorite charity when a loan is closed.

Please help us to continue to support your important non-profit causes by referring your friends, relatives, co-workers and charity supporters that might need our help to purchase or refinance their home.

“My home loan specialists at Awareness Home Funding are the most competent, on top of it people that I have ever worked with.  I say this even though I purchased a repossessed home that was in foreclosure and as a result, it had many complications with the red tape and paperwork.  I would recommend Awareness to my family and friends any time.”  -Richard

Common Homeowner Tax Deductions

March 23, 2010

Owning a home is the American dream and a source of tremendous pride for you and your family.  Another advantage to buying real estate is the ability to shelter a portion of your income from federal taxes.  Following are some of the more common deductions available to home owners.  Along with some basic information on each are links (bold type) to the IRS website where detailed information can be found.    

As always, consult with the IRS or your tax professional for current guidelines and qualifying criteria on tax related matters.  For information about a home loan to meet your needs and goals, contact one of our licensed Loan Officers.

Mortgage Credit Certificate Program  –  The MCC program is a Federal tax credit of up to 20% of the interest you pay on your home loan over a calendar year, and is available in select states.  While this does not reduce your monthly payment, it is a dollar for dollar reduction in the amount of your Federal income tax liability.  In effect, you are lowering your home loan interest rate by a full percent.  The MCC program will remain in effect for as long as your home remains your primary residence and the original home loan remains in place.  Awareness Home Funding is a lender that does help our clients with this program.    

Home Buyer’s Tax Credit  –  Home buyers may be eligible for a tax credit of 10% of the purchase price of their newly acquired home.  First-time buyers may be able to claim up to $8,000; existing home owners may qualify for up to $6,500.  We have provided some information on this program in two separate articles (No Time Like the Present and The Other Side of the Coin).

Mortgage interest  –  Interest, in general, is defined as an amount paid for the use of borrowed money.  In order to deduct interest on your home mortgage loan, you must be legally liable for the debt that is secured by your main or secondary home.  This amount is generally reported to you on Form 1098 by the lender you have made payments to.  This form should also detail any prepaid interest you have paid.   

Points or Discount Points  –  Points refer to specific charges you may pay in order to obtain a lower interest rate for your home mortgage loan.  Fees associated with preparation costs, appraisals, inspections or notaries do not typically qualify as points.   

Mortgage insurance premiums  –  These expenses are paid to allow a buyer to pay a lower down payment than the 20-25% requirement of a Conventional loan and also protect the lender in the unfortunate event of default on the loan.  Qualifying mortgage insurance may be provided by:

  • The Federal Housing Administration in both an upfront and annual fee.
  • The Department of Veterans Affairs as a one time funding fee
  • The Rural Housing Service as a one time guarantee fee

The amount which can be deducted is reported on Form 1098 by the lender you have made payments to.   

Real estate taxes  –  These are taxes charged on real property based on taxable value.  The IRS highlights what specific taxes associated with your property are deductible.  

Home offices  –  If you use a portion of your home for business purposes, you may be able to deduct certain expenses.  Typical items that may be deductible include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, maintenance and/or repairs.   

Moving expenses  –  If you moved due to a change in employer or occupation, you may be able to deduct your moving expenses.  The two qualifiers used to determine whether this deduction applies to your situation are distance and duration.   

Energy improvements  –  Occasionally, government supported programs allow specific home improvements to qualify for a federal tax credit or a partial rebate of the sales price to the homeowner.  These items are usually of an energy efficient nature for products such as appliances, windows or insulation for the home.   

Health related improvements  –  Home improvements made as a result of a health issue are expenses that may be deducted for the tax year they were paid.  The IRS considers these as Capital expenses and explains what may be included and how to claim these items. 

As always, consult with the IRS or your tax professional for all the current guidelines and qualifying criteria in order to take advantage of these tax deductions.  For information about a home loan to meet your needs and goals, contact one of our licensed Loan Officers.

We’re Not Laughing – Okay Maybe We Are

March 9, 2010

Humor could be described as a spice of life that can lighten a mood, liven a moment or linger as a memory.  Sometimes it can bring a full-roar laugh, a simple smile or like now, a sigh of relief that the topic does not apply to you.  We recently read an anecdote on the recent RESPA changes and how some loan officers might be inclined to respond.  Allow us to share …

ARE  YOU HAVING TROUBLE EXPLAINING RESPA TO BORROWERS?

If RESPA changes are the final blow – swaying you to consider a simpler career path, say neurosurgery or something, you are not alone.

I have to vent for a minute, because I know you are with me on this one. Let’s see….

A new borrower comes to you because his Realtor told him that you are a fabulous loan officer and he needs to get pre-approved and get a Good Faith Estimate.

You look the new borrower square in the eye and have to say, “Wonderful! But I can’t give you a Good Faith Estimate because you haven’t identified a property. But I can give you this other “Non-Binding Settlement Estimate” form that my legal department has authorized, that has a 2-page disclaimer stating that you can’t hold me to any of these figures.”

So the new borrower, with a confused look on his face, takes your new form and goes back to his Realtor. The Realtor calls you trying to figure out what you said to the new borrower who now, doesn’t feel so confident about you or anything else in this transaction. You explain. The Realtor calms down.

The new borrower comes back with an identified property and says; “Now I want a Good Faith Estimate.” You prepare one, in perfect accordance with the new RESPA procedures and hand it to new borrower. He gasps. “This is $3,000 more than the previous estimate you gave!”

“Oh, don’t be alarmed,” you say in your most toddler-calming voice. “This isn’t what you are really going to be paying. This is just how I have to disclose it to you.”

The new borrower gives you a sideways suspicious glance, “But what about all the fees the seller is paying on my behalf? I can’t find a credit on this form for those.”

“Don’t worry…it will all work out at closing. This is how we protect you now. We give you inaccurate information all the way up until you actually close on the property. Isn’t that fun! Kind of like a surprise party!” you happily chime – beaming like an idiot while beads of sweat run down your torso.

The new borrower marches out to his car in tearful frustration and calls the next lender on his list.

Scalpel anyone?

This could not be farther from the truth for us at Awareness Home Funding.  The new Good Faith Estimate (GFE) is really a very simple document that helps you, the client, actually understand the real cost of acquiring your home loan.  It lets you know where you have choices in the services you will need, such as a home inspection.  It tells you what fees should not be changing by more than 10%.  And if they do, there will be a good reason, and time for you to understand what just happened before the loan process continues.  It also tells you what fees will not change at all.

So why don’t some loan officers like the new regulations and required forms?  Why can’t they explain the information it details for you?  Why can’t they provide the new GFE for you upfront?  Why such the cloak and dagger approach to helping their clients?  (Now this part, we do find really funny.)

Check us out (http://www.awarenesshomefunding.com/).  Give us a call (866-982-9273).  Let us help you understand the loan process.  That is why you go to a professional in the first place, isn’t it?

What’s the Difference?

February 16, 2010

What’s the difference between a Short Sale, Foreclosure and HUD Home?

Some time ago, we posted a series of articles on different terminology related to home purchases that can often create confusion.  This post covers three more – Short Sales, Foreclosures and HUD Homes.  The current housing market has more homes available that are not the traditional transaction.  Here are just three you may want to know about.

A Short Sale is a home that is being sold by the current owner where the selling price is less than the current balance owed on the mortgage.  Many times there are outlying factors that force a short sale, such as relocation for a job change or a homeowner who has fallen behind in payments and is trying to salvage some equity or avoid foreclosure.  The advantage of purchasing a home in short sale is that you can get the home for its true market value, and not an artificially inflated price. 

The primary disadvantage to purchasing a short sale home can be the time involved.  In many cases, the bank is unaware of the seller’s intentions to sell the home, therefore once the bank receives the offer they must spend a great deal of time investigating the details.  This process can take months.  Unless you have written a deadline to your offer being accepted, you could be locked into this transaction until it is either approved or denied by the bank.  In some cases, the bank can pre-approve a short sale, but keep it mind it has been approved for a specific price.  Any other offer must be resubmitted and approved by the bank.

A Foreclosure sale means that the bank has full possession of the home and is the seller you will be negotiating with.  A foreclosure purchase is most like a traditional home purchase out of these three examples.  The biggest advantage of foreclosure sales is that you are dealing with a seller who has no emotional ties to the property.  It is simply a matter of recovering as much of their money as possible.  The second advantage is that you can purchase a home at a value much below market value.  You are free to negotiate price and seller concessions, but keep in mind the bank has based the selling price on a recent appraisal done to determine value.  The final selling price boils down to how desperate the bank is to sell the property.  So while you can offer a lower price, don’t be insulting.

The disadvantage of foreclosure homes is that they generally require repairs before you can assume occupancy.  The seller (the bank) also has more control of the sales process and can back out for any reason, such as an amended contract with a condition they find unacceptable.  Start by writing a sales contract that you understand, protects your interest and with terms you can agree with.  By reading your contract carefully and in detail you can generally avoid most areas of contention.

A HUD Home is an FHA owned property where the home is made available to individual, owner occupied buyers for the first 10 days it is on the market.  After these initial 10 days, all bids are reviewed at one time.  If no offers are accepted investment buyers can then place bids on the property.  Again the advantage of these types of sales is the ability to get the home for a price under the typical market value. 

The biggest disadvantage to a HUD home is that the asking price is set at an “as is” appraised value.  Any bid for more than this amount must be paid in cash at close by the buyer.  If your sales price is higher than the asking price, you can only mortgage the asking price less your down payment.  Be prepared to move quickly if you have your eye on a HUD home; if the repairs are at a minimum these homes will move quickly.  Generally homes purchased by investors require significant improvements to bring them back to acceptable safety standards.

Don’t be afraid of these types of transactions, just do your homework and work with licensed professionals who have experience with these types of purchases.  They can help you navigate the process successfully.

The Envelope Under the Tree

December 12, 2009

Do you know someone who always seems to have a story to share?  That person who can turn the everyday occurrences of life into an event that must be shared?  That would describe Harry.  He is one of our Loan Officers and has seemingly a million stories that always have an underlying moral.  Perhaps that’s part of the allure.  Anyway, this is one of his stories.  I hope you enjoy it.

“The year I turned nine, everything about Christmas changed for me. That year my Mom and Dad simply exchanged envelopes in place of the usual gifts. The content created the most joy I had ever seen on my parents’ faces. They each had selected a charity to donate in the name of the other.  The details of the donation were packaged in a simple envelope that lay under the tree. I don’t remember exactly what my Dad received but I do remember my Mom’s gift that year. My Dad had taken some of my Christmas “stuff” and added to it for gifts to children who might not have received anything for Christmas. He presented my Mom with a list of the children and the gifts they received.

‘Each year the exchange of Christmas envelopes continued. The creativity and generosity continued to increase over the years. I remember years when a particular family was the recipient of one of the Gifts. Another time our church’s youth group was involved in spreading the joy by helping with the delivery. It was never a question of who could spend the most, the goal was to do the most possible to spread the Christmas message while staying within the budget. As I got older, I was enlisted to help. Sworn to secrecy until Christmas morning, the experience of helping with the Christmas exchange profoundly influenced my own thinking.

 ‘The best part of any worthwhile tradition is the opportunity to pass it on to the next generation. This is one I intend to continue.”