Honest Mortgage Answers

ELOAN & Ditech....

While I type this post, I am looking at the posted interest rates at ELOAN. A 30 year fixed rate today is quoted at 5.25% and I wonder if anyone looking at this rate is bothering to click on the "rate terms" link. Well, I did and here is what it said.....

Assumptions: (in other words, what your loan would have to look like on paper)

• Loan amount: $200,000
• Property value: $300,000
• Points: Under 2% (1 point = 1% of the loan amount)
• Property type: Single family residence
• Loan use: Home purchase or refinance your mortgage at the current balance.
• Income documentation: You are willing to document your sources of income
• Prepayment penalty: None

So here is what it is really saying....
If you buy a home or do a "rate and term" refinance (no cash out at closing) with a minumum loan amount of $200,000.00 at a 67% LTV (loan to value) and have perfect credit, you may qualify for a rate of 5.25%. By the way, you will probably have to pay 1.99% (less than 2%) in points ($3980 to be exact) in addition to title fees, escrows, prepaid interest, and possible underwriting & processing fees.

The problem I am having is that customers will actually take this loan and not think twice about it. Sure they have a catchy slogan, "Low rates you deserve." But while I am reading this, I am thinking to myself, you deserve more than that. The truth is, on the very same scenario, I would offer the same interest rate with a savings of about $2000-$2500 in closing costs/points!!

Now let's look at Ditech.com shall we?
I am looking at the $395 Flat Fee loan.... the main product they are selling right now. READ THE FINE PRINT!!! (I have increased the size below)

*Applies to owner-occupied single-family residential properties only. ditech.com will charge $395.00 for the cost of escrow fee, appraisal fee, notary fees, processing, title insurance and recording the mortgage. Borrower is responsible for new loan interest costs, buyers' title insurance, outstanding property lien, taxes, insurance, private mortgage insurance, association fees, seller fees, certifications and lock-in fees. In NY CEMA fees are paid by the borrower. In NJ the ditech fee is an application fee. Ditech fee not charged in all states. Subject to underwriting approval. Not all applicants will be approved. Full documentation & property insurance required. Loan secured by a lien against your property. Some restrictions apply. Terms & conditions apply. Minimum loan amount for the $395.00 Flat Fee is $100,000.
Okay, now let's look at today's rate and other assumptions for this program:

• Rate: 6%
• Loan to Value: 80% or less ($200,000 loan and $250,000 value)
• TERMS AND CONDITIONS (what does this mean?)
• Perfect credit
• Single Family Residence
• Full income/employment/asset documentation required

What does it mean?

Well if I were to offer you the same deal to you (which I can if you qualify), it means simply this....on a $200,000 loan I would make $4250 in Yield Spread Premium (money given to my company by the investor for our services) plus your $395 Flat Fee for closing, which totals $4645. Out of that money, we pay approximately $1900 for your appraisal, title insurance, closing fee, underwriting fee, processing fee and recording fee (that's all Ditech would pay if you qualify). Let's do the math: $4645 - $1900 = $2745 left that will go to my company for my services. That is approximately $745-$1245 more than I would normally charge on a conventional loan with the above scenario. Translation: The rate is too high on the above scenario. For $745-$1245 in extra money, you could get a lower interest rate rather than giving it away to Ditech. Do you have $745-$1245 you would like to just give away? If so, use Ditech.

You make the decision.... are you worth more?

If you would like more information about my services, please visit my website at Virtual Loan Pro or call me at 877-347-8175 toll free. You deserve more than what they offer. Why not get more while also receiving one on one personalized service?

Posted by Jason Lash at 2:18 PM 0 comments

What not to do....

What not to do after applying for a mortgage or home loan:

• Do not take on new debt. The temptation is strong. There are so many big purchases that people want to make in connection with a move: appliances, window treatments, furniture, etc. When you add to this the fact that, today, everyone offers easy terms and no money down—well, why not just do it? Answer: because you will change what the mortgage industry calls your "debt-to-income ratios" (the relationship of your income to your debt).
  
  
• Do not change jobs. If at all possible, try not to make a career move during the time between your mortgage application and the closing on the home you are purchasing. But, you ask, "What if it’s a BETTER job, for MORE money, in a DIFFERENT field?" Still, try and wait until AFTER closing. One of the factors mortgage companies consider is length of present employment; they are partial to stability. At the very least, changing jobs initiates the need for more paperwork, and may delay your closing.
  
  
• Do not pack too soon. Well, go ahead and pack your clothes and dishes. But do not pack your bank statements, tax returns, or other important paperwork. Most especially, do not pack your checkbook! More than one buyer has had closing delayed while a friend or relative hurried over with additional funds because the checkbook was in the moving van.
  
  
• Do not lease a new car. This should go under the general heading of "no new debt." It is highlighted here because, for some strange reason, many buyers do run right out and lease a new car during the time between mortgage application and closing! As with any debt, this will change your "debt-to-income ratios" and may cause you not to qualify for your mortgage.

In short, do nothing that negatively impacts your ability to qualify for your mortgage loan, or initiates a new round of paperwork. If you have any doubts about doing something that may affect your ability to qualify for your mortgage loan, please consult your loan provider before you do it.

These suggestions are merely that—suggestions. No one is saying, flat out, that bad things will necessarily follow if you do any of the above. They are offered as cautions. Many buyers seem to view the mortgage application procedure as a static action, a snap shot of their financial lives at a given moment in time. It’s not. It’s an on-going process that takes into account everything you do right up until the day of closing.

Posted by Jason Lash at 10:59 AM 0 comments

Welcome!

Welcome to my blog. This is the official first post for my new blog. I hope you find the information contained here useful. Feel free to comment, but please refrain from profane or vulgar language. Thanks!

Posted by Jason Lash at 4:06 PM