Mortgage and Portfolio Loan Guide

Buying a Home on Land Contract

Buying a home on land contract (or seller financing) is a great option to go with if you don’t meet normal lending guidelines for traditional financing. It allows you to take ownership of a home without having to deal with banks (temporarily).

Also called “contract for deed” buying a home on land contract has many pros and cons. Below we dive into 7 major things to keep in mind when buying a home on land contract.

By reading this, and considering these factors, you’ll be able to determine if going this direction with your home purchase is the right fit for you and your family.

 

7 Things You Must Know When Buying a Home on Land Contract

land contract house

Condition of the Property

Many times, a seller is willing to sell on land contract because they know the home is in disrepair or has unique characteristics that won’t pass traditional lending standards.

Selling on land contract is an attractive route because the seller acts as the lender, so bank guidelines don’t matter at the time (because the seller is the bank essentially).

The issue is that most land contracts have a balloon payment on them. This means there is an expiration date on the contract that says the buyer needs to pay it in full within a certain number of years (usually 5 years or less).  At the time when the balloon payment is due, the buyer (you) will need to pay the remaining balance of the land contract. You would do that by either refinancing the home, or selling the home. Now you’re back at square one having to deal with any property condition issues that a lender may see as a problem.

So it is in your best interest to get an inspection prior to purchasing the home so you know full well what you’re getting yourself into. This way, you can address any property issues as soon as possible, and be ready to refinance.

Paper Trail of Payments land contract payments

Since a land contract is usually a temporary solution, it’s extremely important to keep a paper trail of everything. Most importantly, copies of checks of land contract payments.

When it is time to refinance out of the land contract, it is going to be important to show your lender evidence of land contract payments made (on time). Typically, you’ll need to show at least 12 months most recent payments, but you might as well keep the paper trail from day one to establish good habits and set yourself up for success for when it’s time to refinance out of the land contract.

Do not make your land contract payments in cash. Make it easy for the payments to be verifiable. The reason it’s so important to show verifiable payment history is because unlike a traditional mortgage, a seller financed loan is not reported on your credit report. This makes being able to show evidence of on time land contract payments crucial.

Terms of Contract

Buying a home on land contract allows for a certain amount of flexibility on terms, rate, and length of contract.

Anything is negotiable. But really, the seller is mostly in control because they are acting as the lender. Typical terms on a land contract are 15-30 year amortization with a 5 year balloon. This means the payment made every month is applied toward principal and interest. At the beginning, a large portion of the payment is applied toward interest, and very little goes toward the principal. As the months go by, more goes toward principal, and less toward interest. This is the best part of buying on land contract (instead of renting). Just like a traditional mortgage, you build equity in the home as the months/years go buy.

Not only do you accumulate equity naturally through market appreciation, but you also build equity by paying the balance down slightly every month. See how it works, download amortization schedule. Interest rates on land contracts vary, but are typically higher than traditional mortgage rates.

Fair Market Value home value land contract

When not having to deal with traditional lending guidelines, part of that means you don’t have to deal with low appraisal issues when buying a home on land contract.

This is both a good and bad thing.  Good, because you can still proceed with owning the home (even if it’s not worth what the land contract is calling the purchase price). Bad, because if the appraisal comes in low you’re essentially buying a home with negative equity, and hoping the value goes up in the near future.

On a lighter note, it might not be such a bad thing because homes sold on land contract are often in disrepair, so a low appraisal may be expected (knowing that you’re going to make the updates needed in order to help increase the value).

Keep in mind, just because you spend $20K on a new kitchen, that doesn’t mean the value of the home is going to increase by $20K. Every market is different. The amount you spend on updates doesn’t necessarily equate to amount of increase in home value.  Fair market value is based on sold prices of similar homes in the area that have similar amenities and condition.

Down Payment Expectations

It is not uncommon for a seller to expect 10-30% down payment on a land contract.

It’s extremely rare to see a land contract where the buyer put 5% down or less, but it does happen. Keep in mind that the seller is usually looking to sell the home in order to get proceeds of the sale to purchase a new home or to relocate. If there are very little down payment funds the seller won’t be able to accomplish their goals in many cases.

The idea of a land contract is to provide a win/win solution for a unique scenario. The buyer gets to own a home (even if they have unique income/credit circumstances), and the seller gets to sell their home even if there are some unique property circumstances. But if selling means they don’t get any funds up front, it may be a challenge to come to terms with the seller.

When to Refinance  land contract questions

Refinance out of the land contract as soon as you can.

Rates on land contracts are typically higher than traditional mortgage rates. Why stay in that loan longer than you have to? Make sure there are is not a pre-payment penalty on the land contract. A pre-payment penalty is when you are charged a fee for paying off the loan prior to a certain date. If the land contract has been in place for less than 12 months, the lender is going to treat it as a purchase.

Example: you buy a home on land contract in May, 2016 and seek to refinance out of it in December, 2016. Since you’re in the land contract less than 12 months, the new lender is going to treat the new loan as a purchase loan. The down side to that is you cannot use the new value of the home even if significant improvements have been made. The value will be the lesser of the purchase price or the appraised value. After you have been in the land contract 12 months, you can use the new/appraised value.

Recorded Land Contract vs. Non-Recorded

When it’s time to refinance, it’s very important to understand whether or not the land contract was recorded with the county when you purchased the home.

Typically, you’ll know by looking a recent real estate tax bill. If your name isn’t on the tax bill, that means you’re not the owner (in the eyes of the county), and the land contract wasn’t recorded. Don’t worry, it’s not the end of the world if the land contract wasn’t recorded. Conventional mortgage guidelines state that as long as the land contract was executed for 12 months or more, the new loan can be treated as a refinance.

However, if you’re seeking a government loan like an FHA loan, the land contract needs to be recorded for 12 months in order to treat it as a refinance. If you have been in the loan 12 or more months, and it wasn’t recorded, you won’t be able to “refinance” into an FHA loan, it’ll have to be treated as a purchase. The biggest issue with that is value (having to use the lesser of the purchase price on the land contract or the current fair market value). Simple solution: see if you qualify for conventional financing instead of FHA.

Conclusion

Buying a home with seller financing can be a fantastic temporary solution for temporary circumstances. If the intention is to live in the home long term it is crucial to do the appropriate research (above) in order to set yourself up for long-term home ownership success.

By the way, if you do have unique income or credit circumstances you may be a good candidate for a portfolio loan.

mortgage loan officerQuestions?

I invite you to reach out to me directly. With extensive experience in land contract refinancing, I should be able to help you with your land contract financing needs. [testimonials]

Looking forward to connecting with you soon!

 

 

real estate investment loans

 

What is a Gift of Equity?

Sometimes it’s nice to be able to pay your rent to family because there is a mutual trust that already exists between tenant and landlord. It’s even better when you can buy your home from a family member. This is one of the cases where you can buy a home with zero down payment with use of a gift of equity.

In this article we’ll go over everything you need to know about how to buy a home from family with a gift of equity and zero down payment.

What is a gift of equity?

A gift of equity refers to the gift provided by the seller to the buyer in the form of existing home equity. In this type of scenario there is no exchange of funds. The seller simply agrees to take less net proceeds at closing, which allows the buyer to have instant equity while providing no down payment.

These types of transactions are common with parents who are selling their home to their child.

 

what is a gift of equity

 

Here is a basic example:

Jimmy has been renting from his parents for 2 years. Paying rent on time faithfully every month.

Instead of putting their home on the market, they agree to sell their home to Jimmy.

The home is worth $200,000 and his parents are looking to sell their home. They are only looking to net $150,000 out of the sale, which means they are willing to provide a gift of equity of $50,000. When the transaction gets to the closing table, instead of little Jimmy coming out of pocket 50K for down payment, the gift of equity is done. This means that he now owns a home that already has 25% equity.

What about closing costs?

Right, so being able to do zero down payment with a gift of equity is nice, but what about closing costs and escrows for taxes and insurance? Good question, glad you asked.

The nice thing about dealing with family is that you can talk things out and get a clear understanding of what the proceeds need to be. In other words, the parent and child can clearly communicate how much funds the parent needs to get at closing for this to make sense for them.

Once that is clearly understood, the sale of the home can be structured in a way to benefit all parties involved with complete transparency.

The way to get closing costs paid for without the buyer having to cover the costs is by adding seller concessions (or seller contributions) to the formal purchase agreement. This is where the seller gives a credit toward the buyer’s closing costs and escrows.

In many cases the seller credits can be up to 6% of the purchase price of the home. Which means that if the sale price is $200,000, the allowable seller concessions can be as high as $12,000. That amount should be more than sufficient to cover costs and escrows (depending on how much real estate taxes are in your area).

So let’s take a look at how that would apply to the case with Jimmy…

Same price as above, at $200,000. Instead of giving a gift of equity of 50K, the parents give a gift of equity of 40K. But now, on the purchase agreement they agree to provide $10,000 in seller concessions.

In this case the loan amount would be $160,000. The sellers still get net proceeds of $150,000, AND the buyer didn’t have to come out of packet to make it happen. It’s a win/win. The loan amount is $10,000 higher (roughly a $50/month difference in monthly payment), but the buyer didn’t have to deplete is assets to make it happen.

It’s basically a way to finance the costs, really just a matter of structuring the purchase agreement properly to meet everyone’s goals.

Important things to keep in mind.

Appraisal – The only way a gift of equity works is if there is actual equity that already exists. The lender is going to order an appraisal to get an opinion of fair market value. If you’re trying to sell your home for $200,000, but it only appraises for $150,000 then the gift of equity amount needs to be revisited, and the purchase agreement needs to be restructured accordingly. [more on appraisals here]

Documentation – The lender is going to need to verify everything (just like a normal purchase of a home). If the child has been renting, there needs to be legitimate proof of rent. If the child gave a deposit of any amount at the beginning of the lease, there is going to need to be a paper trail.

Acceptable Donor – When dealing with a gift of equity scenario, the seller an buyer need to be related. Here is the definition of an acceptable donor with regard to a gift:

“A relative, defined as the borrower’s spouse, child, or other dependent, or by any other individual who is related by blood, marriage, adoption, or legal guardianship; or a fiance, or domestic partner.”

As you can see, there is a little bit of room for discussion on that. There is a grey area. There are endless “what ifs” on this topic of “related”. Bottom line, don’t try to pull a fast one on the underwriter.  If you’re trying to do a gift of equity, it needs to involve a clear relationship like parent/child for example. Otherwise, there is a chance an underwriter could shoot it down.

Conclusion

Buying or selling a home with the use of a gift of equity can be a very advantageous route to take for a buyer and seller. The buyer doesn’t have to provide a down payment, and the seller gets the piece of mind of helping their family achieve the dream of home ownership while getting the proceeds they are seeking.

As always, transparency and communication is key to make the process as smooth and painless as possible.

I invite you to reach out.

mortgage loan officerIf you’re running into any challenges with getting this type of scenario put together, or the buyer doesn’t quite meet normal lending guidelines, you’re welcome to reach out to me with your specific questions.

You won’t be connected with an intern or someone in a call center, you will be connected with me directly.

If I cannot help, I should be able to point you in the right direction at the very least.

 

 

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Embrace the Z

“Acceptance doesn’t mean resignation; it means understanding that something is what it is and that there’s got to be a way through it.”

-Michael J. Fox

When you have a powerhouse website, consisting of a wealth of information, that serves as a resource for millions of people, there are going to be some naysayers. I hear real estate professionals and mortgage pros bad mouthing Zillow as if their negativity will somehow alter the house-hunters buying habits.

Here’s the bottom line: When people think about buying a house, they are likely to use Zillow as a resource at some point in the game.

Why fight it? Why discredit a top resource for buyers, sellers, homeowners, etc? Here are a couple of reasons there is some general push-back:

Home Value

Oh boy, here we go. A potential seller takes a look at the estimate Zillow gives them and they are blown away by the equity they have gained in the last couple years. They are so excited and feel they could make a great profit. There is a feeling of anticipation that they will finally have the opportunity to upgrade to the home of their dreams with the proceeds of the sale of their home. They contact their Realtor to list the home.Stop crying about zillow

Now the Realtor (the real-life expert) has an opportunity to showcase their expertise in the market. There is a bit of a let down because of a difference in opinion of home value between the Realtor and the Zillow estimate. But that’s okay. This is where the opportunity lies. The Realtor is able to tactfully explain how homes in the area that are similar to the seller’s home have sold. This is where the Realtor gets to roll their sleeves up and use the facts.

Fair market value is an opinion. Zillow uses formulas to come up with values which are beyond my pay grade, but that doesn’t mean they are going to be accurate. Let’s be real here. If Zillow was right, there would be no need for an appraiser. And even if a buyer is willing to pay a certain price for a home, the appraiser may still come back and give a different opinion of fair market value. Even more interesting, a different appraiser can come up with a different value than the original appraiser.

Why? Value is an opinion! An opinion of how different factors like age, amenities, condition, location, and size can impact the value of a home. Another huge factor is which comparables (recent sales of similar homes within a reasonable distance from the subject property) to use on the appraisal report. When selecting the comps the appraiser is responsible for finding and using the sales of properties that are most similar to the subject property (the home that is being sold). If the appraisal comes in lower than the agreed upon purchase price the buyer will either have to put more down (depending on the loan program, and how much they were originally putting down) or the purchase price will need to be renegotiated between the buyer and seller.

The estimate of value on Zillow is simply a starting point. It’s on the local experts to be effective communicators on their market, not Zillow-bashers.

Pre-approval

A hopeful home buyer can get a pre-approval in minutes on Zillow. The system will ask for general info and pop out a thumbs up or thumbs down so that the consumer can get an idea of where they stand.

The only problem is that there are so many factors that go into a mortgage approval which require an in-depth evaluation of a borrower, and their current circumstances. These instant pre-approvals go against everything I stand for when it comes to setting proper expectations for a home buyer. However, it does give them a place to start. Yes there are disclosures below it that pretty much state nothing is for sure until you talk to your lender, but that is likely to be overlooked because they already see they’re “good-to-go”.

Again, it’s just a starting point. For a true understanding of where you stand, contact your local loan officer. If you did happen to get a thumbs down, and don’t meet typical mortgage standards, here is a great solution.

So why do people use it?

Well first of all, have you seen the Zillow commercials?

The emotion involved in the home buying process is beautifully expressed in their marketing efforts. Their app is easy to use. Not happy home love only can you find upcoming open houses, but also previous tax info, neighborhood trends, estimated payment, etc. You can save the properties you like, and keep browsing. It’s very user-friendly. Are there other websites that offer the same or similar features? Sure, but I promise you they do not have the online visibility and recognition that Zillow has.

There is an advice section on the website where anyone can ask any question pertaining to home ownership. Consumers ask, experts answer. This is awesome because people are able to discuss private matters without having to give out their personal information. This is a huge win for consumers because they can protect their pride, get their questions answered, and not have to deal with a pushy salesperson. It’s a win/win for everyone.

There are some “experts” on these advice forums that really have no business giving advice, but that’s okay too! The consumer is able to weed through the responses, and decide for themselves who is the most credible resource for their particular situation. At that point they can contact the expert through their Zillow profile. Voila, the referral process begins. Best part? It’s free! Now you have two people connecting who may otherwise would not have crossed paths.

The beauty of this is that the consumer is able to do so much research in one place. Is all the information they find going to be spot on? Probably not, but they are able to connect with an expert who will help them connect the dots, and get answers to the questions that were previously a mystery. All this, done from their couch, while sipping eggnog.

Zillow Testimonials

Last but not least, let’s talk about testimonials. Genuine testimonials. They’re huge. You know it, I know it. So wouldn’t testimonialsit make sense to at least ask for a review on the site that everyone goes to when they research home buying?

People want to know what it’s like working with you before they call you. It’s one thing for you to have testimonials on your personal website or your Facebook page. It’s another thing to have reviews posted on a top website with millions of unique visitors on a daily basis. Alexa.com (a resource for web analytics) tells me that Zillow is the 62nd most popular website in the United States, and ranks 235th in the entire world. Not the 62nd most popular real estate website, but the 62nd most popular website regardless of industry or subject matter. Not only that, but average daily page views per visitor are sitting at about 7.9. That’s an insanely high number of average page views in case you were wondering. Hmm, I wonder if having your stuff on there might be a good idea? Just a thought. Either that or you can keep crying to your friends and family about why it’s such a pile of garbage. Up to you I guess.

Here’s the thing, nothing will ever substitute the special interaction between the homeowner and the real estate pro. Don’t be afraid of the world-wide web robots taking control of the planet. The human connection will always be the irreplaceable element in anything we do. As experts we might as well embrace these tools and leverage them to our advantage. There is enough to go around 🙂

Do you agree? What other advantages do you love about Zillow? What are some other disadvantages that you’re not a big fan of?

Adam Lesner | Mortgage Loan Officer NMLS 198818 | Brighton, Michigan

So Your EX Destroyed Your Credit…

Portfolio Loan

Post-Divorce Mortgage

I have seen it countless times. An otherwise “A grade” borrower is left with no mortgage options because their ex-spouse was extremely irresponsible with their finances while going through divorce. Resulting many times in no other option than having to file for bankruptcy, and even foreclose on their home.

For these types of situations there is hope!

FHA, VA, and conventional guidelines are set in stone. As brutal as it sounds, they don’t really care about the sob story. If you had a nasty divorce which resulted in a bankruptcy, short-sale, or foreclosure you’re pretty much between a rock and a hard place if you have any desire to be a homeowner in the next couple years.

So what can you do? You have been a homeowner since you graduated college 15 years ago. Are you really going to be forced to live with family, or rent? NO. Believe it or not, there are lenders out there that take a common sense approach to mortgage loans for people with bad creditlending. Lenders that will look at your situation from a common sense standpoint, and make every effort to understand exactly what led to the circumstances that you’re in. Lenders that will take into consideration that you fell on hard times, but are now back on your feet. These are the lenders that offer in-house portfolio lending. Lending designed to bring common sense back into the home financing world. Where you don’t have to fit inside the little black and white boxes of the strict government guidelines.

Imagine that?  Being treated like a human being instead of a statistic. What a refreshing concept?

So where do you start? The best thing to do is seek out a small-to-mid-size lender, bank, or credit union which offers portfolio loan financing. Find out what their requirements are for these unique loans. Find out what you can do to prepare as best you can. There are still going to be requirements to meet because they want to make sure you ARE back on your feet, and confirm that you do have the ability to repay the loan.

thumb-422147_640Some things to prepare yourself for when getting a portfolio loan:

  1. You’ll probably be required to put at least 10% down.
  2. Points may be required to cover the level of risk they are taking.
  3. Typically there is no mortgage insurance requirement 🙂
  4. You need to have a verifiable income.

 

Other situations when a portfolio loan may be your best option: unique property you’re looking to buy, self-employed less than two years, bad credit because of an isolated incident like a work injury, etc.



You thought you didn’t have a chance in the world to buy a home, but don’t give up. If you’re back on your feet, and you have at least 10% for down payment, home-ownership may be more within reach than you thought.

portfolio mortgage lenders

 

I invite you to reach out to me directly to see if a portfolio loan is the right fit for you.

At the very least I should be able to point you in the right direction.

 

real estate investment loans

Repair your credit today with Lexington Law

6 Proven Ways to Close on Your Home Lightning Fast

“Dude, so do you think we could close next week?”
“Dude, no. You didn’t even send me your stuff yet.”

I know this might be a shocker for you, but lenders actually want to close your loan. In fact, if it doesn’t close then they have wasted countless hours and resources with nothing to show for. Just like Realtors. The thing is… we have to cover our ‘you-know-what’, and make sure the loan meets all the fun and amazing guidelines that have been put into place.

Here’s the kicker, there are ways to speed up the process and make EVERYONE look good. Want to know how? Awesome! you’ve come to the right place. 

First of all, let’s get one thing straight: It’s going to take about 30-40 days to get to the closing table. That doesn’t mean the clock starts ticking when you found the house on Zillow. That means once you have a fully executed purchase agreement, and you tell me the inspection came back with flying colors, then we get rolling and order the appraisal. Is there such thing as closing quicker than 30 days? Of course. And if you use these techniques below, I promise you’ll be setting yourself up for success.

  • Get your crap together. If your lender has given you a list of stuff that is needed, take an extra 5 minutes to make sure you’ve gotten everything requested. An extra 5 minutes of making sure you included all pages on tax returns and bank statements will save you a couple necessary trips to the fax machine, and possibly a week of being in process. Click here for the list that is detailed and fool-proof.
  • Order inspection as soon as you have an accepted offer. This should be your next phone call after getting the good news that the offer was accepted. Many times your Realtor or lender will have a recommendation as to who should complete the inspection. You want to make sure the home is in reasonable condition, but you don’t want to waste money on an appraisal if the inspection comes back with more than you’re willing to take on. So it’s important to get the inspection done ASAP so you can move onto the appraisal, and get rolling.
  • Be fricken honest. Don’t withhold information from your lender thinking that will reduce bumps in the road. I promise, it will only make things worse. If you communicate something that you think might be a problem, your loan officer will now can be proactively working on a solution for you. The last thing you want is for us to find out something last-minute, and scramble to meet the contract date.
  • Answer your phone. Or at least respond to emails/texts. I know this one seems obvious, but dropping the ball on communication can not happen. Everyone needs to be in the loop as much as possible to simplify the process and maximize efficiency.
  • Get your homeowners insurance in-line. I can’t tell you how many times “the last thing” we’re waiting on is a declarations page from the homeowners insurance company. Not because the company is slow, but because the borrower waited till 48 hours before closing to get a quote. Once you have the appraisal, give your insurance guy a call to put together a policy.
  • Stay in town. Or at least have the means to easily communicate while you’re gone. Buying a home is obviously a big commitment, which involves a lot of moving parts. If someone falls off the map, everything in the process can come to a screeching halt, causing major delays. But if you are leaving, give all parties a heads up, and double-check to see if there is anything that is needed from you.
I can tell you with absolute certainty, if you keep these things in mind when you’re buying a home things will go much smoother for you. 

 

There are so many factors that can create challenges to overcome. Some are fixable, some aren’t. If you let a little bit of your OCD side come out and play, it will work wonders in terms of detail and promptness.

What bumps in the road have you experienced recently that caused a seemingly unnecessary delay?

Zero Down Mortgage – USDA Home Loans

RD loan

Zero Down Mortgage

Did you know that even if you’re not a veteran you can buy a home with a zero down mortgage in many areas? And it’s not too good to be true. There are, however, some restrictions regarding location and income.

The United States Department of Agriculture (USDA) Rural Development guaranteed loan usdalogoprogram is a government loan designed to help low-moderate income earners purchase a home in “rural” areas. However, you may be surprised to see what the government considers to be rural and low-moderate income.

Income

The income restrictions will vary across the country and even across each state. Here is an example for my local market in Livingston County, Michigan. For a guaranteed RD loan the annual household income must be at $93,450 or below. Even if the spouse is not a borrower on the loan, their income will be used as a factor in the household income. USDA looks at the whole picture, not just the applicant. You can use this tool to help you get an idea if your family qualifies for an RD loan in regards to income. Remember when using that tool, you’re looking for qualifying on the guaranteed loan, which will maximize your buying power from in income standpoint.

Location

Many folks are shocked when they take a look to see that their neighborhood is in an area that is considered to be a “rural area” which allows them to get a zero down mortgage. Just outside the metro Detroit area and not far from many major cities Rural Development financing is available. Although the mapping tool on the USDA website is not 100% accurate, you can use this tool to give you an idea of what areas are eligible. You may be pleasantly surprised to find that you don’t have be living “out in the sticks” to be eligible for Rural Development financing.

What is also exciting about RD loans is that you can buy a condo with this program as long as it’s within the eligible geographic limits. Crazy right? Some people call RD loans “farm loans” and you can buy a condo with them. How awesome is that?!

What to Expect

  • Make sure you have your ducks in a row in respect to credit. You don’t need to have perfect credit, but it needs to be reasonable.
  • The process may take a little bit longer than other loans because it needs to get final approval by USDA after the lender approves it. However, right now in my particular market in Michigan, the RD turn time is 2-3 days. So not a significant delay currently.
  • Mortgage insurance is significantly less than FHA on a monthly basis, about 1/3 of what it costs on FHA.

There are so many expenses to consider when buying a home. So if you have an opportunity to buy with a zero down mortgage, and you qualify, why not take advantage of that opportunity?

Watch Video:

The Most Important Part of the Mortgage Process

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 The Most Important Part of the Mortgage Process

By: Ted Lyons

There can be no denying that the mortgage process has become significantly more complicated in the last several years.   The real estate/mortgage bubbles and subsequent collapses made clear that the envelope had been pushed too far when it came to mortgage products that were available.  The industry joke in mid-2000’s was “You only need a Social Security Number and a pulse to get a mortgage – and there’s even some flexibility when it comes to the pulse.”  As the ruins of the bubble era mortgage marketplace were surveyed a flurry of government regulations ensued.  All well-meaning, some flawed in their execution, but each of them needing to be taken into account as we walk through the actual work of obtaining a mortgage.

As a result of all of these changes and the alphabet soup of regulatory agencies and regulations that resulted (CFBP, MDIA, HVCC, QM, etc) the most important part of the process has become not who can make the most outlandish rate pitch – but rather which originator and which company can guide you through the experience intact.  The sad truth of the matter is that for all of the regulatory changes there still isn’t much to stop a large boiler room of a large mortgage bank or lender from promising one rate, and then at the end of the process delivering another.  Their advertisements are littered with enough fine print to choke a horse and the process can be so overwhelming that at the end of it, one doesn’t even necessarily remember what was promised at the beginning of it.  This doesn’t mean that an individual shouldn’t examine the market and make sure that the interest rate, terms, and costs of a given originator and company aren’t in line with that market.  But many of the most severe self-inflicted wounds while getting a mortgage can be from chasing that Holy Grail of a one-eighth lower interest rate or going with a company that says they will give you $50.00 off your costs because you have an account with them.

The demands can be tough in the mortgage world these days.  My customers oftentimes vocalize that the process has become mind numbingly intrusive – and I can’t argue with them there.  So my job is to be their Sherpa, guiding them through unavoidable challenges at all times. I am also their Gladiator, fighting for them so that they can buy or refinance their home when the going gets tough.  That’s why the most important part of the mortgage process today is having a champion originator who works for an organization that can be trusted.  If you’ve had a great experience with an originator in the past – stick with them.  Seek out the advice of colleagues, friends, and family who have had GOOD mortgage experiences.  Finally, look your originator in the eye and determine for yourself if they look like they have the intelligence and the guts to help you get your mortgage – even if the process turns out to be challenging.  Because it’s possible that it will.

Ted Lyons, NAMB, MMLA
NMLS/Michigan License # 140426
Michigan First Mortgage  NMLS# 130329
Branch Manager
Direct (734) 807-1017   Fax (734) 786-2230