Texas Home Loan Blog: August 2007

Personal Development for Realtors. Leveraging Technology. 

I recently read a short blog by Marchel Peterson. Really, it was a question. Photoshop - looking for suggestions on how to learn the program!

My answer: http://fixphotos.classes.cnet.com/

CNET.com has been offering free online course for a wide range of subjects. Like how to edit digital photos.

Some other current course offerings:

Better Presentations with PowerPoint 2003

How to create a utube video for under $25

Manage and save your Outlook email (DallasLoanGuy recommended)

See a complete list here => http://classes.cnet.com/?tag=navtab

I think the current offerings change from time to time. Maybe it would be a good newsletter to subscribe to to stay on top of technology.

I am a firm believer in Sharpening Your Saw as is Stephen Covey in his book 7 Habits of Highly Effective People. (Sharpening the saw is habit #7)

Nothing can be better than free training.... Imagine how much more you can accomplish when you leverage technology.

DallasLoanGuy.com originates Texas Home Loans and specializes in running EVERY file through Automated Underwriting because I truly believe that EVERY loan file deserves the efforts of 'no stone goes unturned' in looking for the best deal.

Tom Burris
DallasLoanGuy.com
Dallas, TX

"A Home Loan For Every Texan"

http://www.dallasloanguy.com/

I am getting tons of calls from people worried about the state of the mortgage industry. The common misconception is that 100% financing is dead/gone/kaput.

Uh... NOT!!!

NOTHING has changed with 100% Financing for fully documented loans. We are talking about good credit conforming loans that are sold to Fannie Mae/Freddie Mac. Alt-A & Subprime is still in turmoil as of this writing.

Full doc loans require the bank/lender to review your income documentation as well as assets. This is quite different from the 'Stated Income' or 'No Doc' loans that have dried up in recent weeks. And I am getting these full doc deals approved every day!!!

Now, there are some general concerns about housing prices. In The Great State Of Texas, we don't have a housing bubble. As a matter of fact, it is my opinion that we only have those bubbles in a few markets where speculation over inflated prices.... which was made a lot easier with the relaxed guidelines of several months ago. Those markets are going to have some winners, and some losers. It is the price you pay when you INVEST in the real estate market. <== yes, I said INVEST. So, expect the appraisals to be reviewed. Expect the lenders to scrutinize a little more. Expect the usual exeptions to go away. Expect the 2nd liens to remain tight..... which means that if you do not have 20% down you will have to pay PMI one way or the other.

Yes, we are in a soft market in most states.... if not all states!! Builders are discounting and that puts a little crimp on existing home values. <== Especially if that builder is building in YOUR price range and in YOUR neighborhood. You should consult a Professional Realtor regarding values... I don't wear that hat. But most markets should rebound from this market correction and real estate is still a good bet in most markets.

DallasLoanGuy.com originates Texas Home Loans and specializes in running EVERY file through Automated Underwriting because I truly believe that EVERY loan file deserves the efforts of 'no stone goes unturned' in looking for the best deal.

                                                    To be continued.....

Edited to add: Ok... I wasn't 100% correct with my statement that NOTHING has changed with 100% financing. While the approvals are the same, there may be property issues due to updates in the automated underwriting systems. Value will be very important on 100% deals. See recent developments in the following link. And please comment. I would like to know if this is affecting anyone yet. => http://activerain.com/blogsview/174514/Attention-Realtors-in-Declining

Tom Burris
DallasLoanGuy.com
Dallas, TX

"A Home Loan for Every Texan"

http://www.dallasloanguy.com/

Texas Home Loans

Expect lenders to scrutinize appraisals in these markets. Be prepared to see the appraiser needing additional comps and even recent listings to support value.

See full press release!!

https://www.efanniemae.com/sf/guides/duguides/pdf/current/rnsuppdodu57.pdf?referrer=durn

While the recent credit tightening in mortgage lending has mostly been contained to the Subprime and Alt-A(low doc) markets..... Full Doc borrowers will be affected if the collateral is not 100% verifiable.

I would NOT be surprised to see lenders counteroffer previously approved 100% deals with a 95% limit. I haven't seen it yet, but I do expect it.... at least in the declining markets(or areas where value is hard to determine).

What does this mean for realtors? Quite simply, valuation will be tight. So, those deals with all of the seller paid closing costs will be harder to do. Work with your Mortgage Lender to determine borrower strength. Make sure you use your financing contingencies to assure the protection of the borrower's earnest monies. Offer your services to the appraiser should they have difficulty providing the additional comps that may be required.

No, I am not asking you to do the job of Lender & Appraiser. I am informing you that to remain highly successful in the current climate, you should be willing to think AND work 'Outside The Box'. <== I hate that term. So cheesy and overused.... but my thesaurus is broke.

Maybe now is a good time to take that Loan Officer up on that cup of coffee.

Good luck.

DallasLoanGuy.com originates Texas Home Loans and specializes in running EVERY file through Automated Underwriting because I truly believe that EVERY loan file deserves the efforts of 'no stone goes unturned' in looking for the best deal.

Tom Burris
DallasLoanGuy.com
Dallas, TX

"A Home Loan For Every Texan"

http://www.dallasloanguy.com/

I can't tell you how many Good Faith Estimates(GFEs) that I have reviewed. But it is a lot!! And I am always amazed at how different people and different companies arrange their fees. Some are pretty generic and basic, like mine. Others are elaborate in their descriptions like the Loan Officer is a walking thesaurus. Some even have some extra special EXTRA fees that I don't agree with. But the fact that they are so different just tells me that one cannot really compare a GFE line by line. The borrower must go to the bottom of the closing cost summary and look at the total. Ignoring the prepaid taxes and insurance as well as the title fees.... Because those fees will be the same regardless of which loan is chosen. There are a few ways to help your self though. For example: Ask the lender to put all of their fees on the discount line. This little trick may save you money come tax time. (Consult a CPA)

I get into discussions about junk fees a lot. These are fees that are tacked on by loan officers to pump up the profit in the deal. And the number one culprit.... The Admin Fee.

Or is it?

If I broker a loan to a lender who charges an Admin Fee.... And I, in-turn, pass that on to the borrower.... is that a junk fee? This is absolutely 100% not junk. Anyone who says that it is uninformed!! That same lender could rename the fee a ‘Funding Fee' and no one would bat an eye. Why is that? Maybe they are getting their advice from someone who needs to learn to keep their mouths shut about things they don't quite understand. Like the person who says.... ‘Oh, you can get a better rate at ABC Mortgage Company". Uh, really? Like that was fast. How did they take a full loan application and pull credit and line up the borrower with underwriting guidelines so fast? Maybe ‘these people' should be lenders. I mean, I can't tell you how many times I have heard people say that.... with ZERO knowledge about the borrower's current employment, savings and credit profile.

Fees are real. People have to get paid! Lenders demand a certain amount of fees up front to cover overhead. Processing, underwriting, the light bill.... Ect. These are real. And if you don't pay those fees on the Settlement Statement, where did they go? Well, if you have wondering.....  they went into the rate. Which means that you will pay those fees over and over and over again during the life of the loan. Which isn't bad if you only stay for 3 or 4 years, but you aren't coming out too good on your real estate transaction in that short of time frame either, which may be another blog topic.

My BEST ADVICE to anyone getting a home loan. If you do not feel 100% comfortable with your lender's rates and fees... get a second(or third) opinion. Don't get too caught up in what the fees are named. DO get caught up in the total closing costs... not to be confused with prepaid items(taxes and insurance). Your realtor can help too!!! They see a lot of GFEs as well... and can refer you to an Honest Mortgage Lender if you aren't getting a great deal!!!

DallasLoanGuy.com originates Texas Home Loans and specializes in running EVERY file through Automated Underwriting because I truly believe that EVERY loan file deserves the efforts of 'no stone goes unturned' in looking for the best deal.

Tom Burris
DallasLoanGuy.com
Dallas, TX

"A Home Loan for Every Texan"

http://www.dallasloanguy.com/

Texas Home Loans

I have been going to these netwroking events for a while now.... It is a great place to chat with referral partners and competitors about the state of the industry and make new friends at the same time.

For those looking for quality backlinks, their website gets a lot of hits every month.

I don't think I have ever closed a deal as a direct result of the DFWAMP Happy Hours, but have made a lot of friends in the business.... which I place value.

I have been busy, so I haven't been in a few months. I am so looking forward to kicking back for a couple of hours on Hump Day.

DFWAMP hosts several events in different locations. So if the N. Dallas location is inconvenient, then take a look at the other events. http://www.dfwamp.com/network.htm

Maybe I will se a fellow ActiveRainer out there some day!!!

Cheers!!

AMP Networking info and reservations - 817-455-5255

Tom Burris
DallasLoanGuy.com
A Home Loan For Every Texan

Texas Home Loans
Texas Cash Out Loans

I have heard this one before. A borrower buys a new home with 100% financing with all of the closing costs rolled into the loan or Down Payment Assistance Programs were utilized. Now, that ARM is adjusting and they do not have the money for closing costs.

Desperate times call for desperate measures. And although I rarely suggest this, it just might be the 'Silver Bullet' that the homeowner needs to save their home.

The No Fee Home Loan or No Fee Mortgage or No Closing Cost Loan. It can be called many things, but they are all the same thing. And don't let anyone tell you that it is a 'special in-house program only'. These have been around forever. Let me tell you how it works. But first, some facts: Fees are real. People have to get paid on a home loan. No one 'waives' fees. They simply charge those fees a different way. Ken Cook wrote a nice piece about The Truth About "No Closing Cost" Loans. A good reference for more info on this subject. Ever see those commercials on TV that say 'NO CLOSING COSTS'?!?!?! Well, there may very well be no closing costs on the settlement statement, but the borrower will pay those costs over and over again through higher interest payments. Somebody lied.

When a loan officer originates a mortgage, they can offer their clients any rate they wish, really. By that, I mean that they can offer a competitive interest rate based on their costs of that rate. Or, that loan officer can mark up the rate and earn a commission from the investor for the extra interest that will be earned on the loan. This bonus is called Yield Spread Premium(YSP). So, if a borrower qualifies for 6.5% rate, the loan officer can charge 6.75% and earn an additional 1% of the loan amount in commissions(pricing varies and commissions earned varies for each .25% increment). Well, not all loan officers work for just that 1% origination fee, so this is very normal. Brokers do it. Banks do it. Don't let anyone tell you that they offer the best rate..... they don't.

But, how can we look at this in a positive way. Let me put an interest rate of say 7.25% on the loan. I now have earned almost 3.5% of the loan amount in extra commissions. That extra commission can be used to pay the customers fees in the event that they cannot come up with the money. 3.5% of $200,000 = $7K. MORE than enough to cover all of the borrower's closing costs.

Problem solved? Not yet..... it is NOW TIME to make sure the client gets into a fixed rate. No need to try and do this over and over.

While this little 'Silver Bullet' works for a lot of folks..... there will be borrowers still too far upside down on their home. The property must appraise for the loan amount!!!

This is an example of a positive way to use YSP to the benefit of the borrower. And just might help save someone's home.

Tom Burris
DallasLoanGuy.com
A Home Loan For Every Texan

Texas Home Loans
Texas Cash Out Loans