Monday, June 23, 2014

How to get rid of "Your are Pre-Approved" Junk Mail

Do you get junk mail from other mortgage companies, insurance agents, credit card companies and car dealers with ads telling you that you have already been pre-approved to do business with them? 
Well, let me tell you why!  
Credit bureaus make a ton of money selling “credit profiles” to companies who are looking for a certain type of financial history. While they don’t know your social security number, the company sending you the pre-approved offer goes to the credit bureau and pays for a list based on certain criteria—criteria like minimum credit scores, geographical areas, mortgage or car loans or outstanding credit card balances.
If you read the tiny, tiny print, they must also disclose that you were “pre-screened” and that’s why you were sent the marketing solicitation.   
Also, in the tiny, tiny print (that you can barely read), they must disclose how to Opt-Out so your name and address are not sold, which also eliminates some of your junk mail.  
It may be in your best interest to exercise this option because it not only reduces the amount of junk mail you receive, but reduces your chances of being victimized by identity theft.
Instead of reading the fine print, I want to tell you how to opt-out of receiving the pre-screened offers.   
First, the website to visit is   
You have a couple of options:
  1. You can opt-out from receiving offers for five years. This can be done online but you’ll have to renew every five years.
  2. You can opt-out permanently. However, you must download a form and MAIL it to the address provided.
  3. You can also opt back in if you opted out previously.  
You can also download a couple of reports from the Federal Reserve. If you need help opting out, please feel free to call me.

Friday, February 14, 2014

How to Shop for a Real Estate Agent that's Right for You!

Buying or selling a home can be exciting.
But, it can also be a mixture of fear, anxiety and anticipation because it means a new chapter in your life.  So, choosing the right real estate agent is one of the first things to consider when making a move.
While friends and family may refer real estate agents to you, their home buying or selling needs are probably different than yours.  The internet is a good way to do your research, but consider it only a starting point in your search for a real estate agent that represents your interests.
First of all, there are many intangibles that you’ll need to consider:
  • Is the agent’s personality compatible with yours?
  • Do you “sense” they are honest and trustworthy?
  • Does the agent have a clear understanding of your objectives and needs?
  • Do they have a list of referrals that you can call to get their opinion?
Secondly, here are the some things for you to verify when shopping for an agent to represent you:
Licensing – While a real estate agent must pass certain tests and must be licensed by the state, you should also check to make sure their license is valid and in good standing. Have they had any complaints filed against them?
National Association of Realtors® – Not all real estate agents can call themselves Realtors® unless they belong to this association and agree to be bound by their “code of ethics.” It’s an additional layer of protection for consumers.
Education & Specialization – It’s important that real estate agents continue their education. They can also take courses if they’d like to “specialize” in certain categories of a real estate practice, like “short sales/foreclosures” or “senior housing.” Ask if the person has any educational designations and what areas of real estate they special in.
Local Knowledge – A good agent will have local information at their fingertips, including housing trends, how many houses on the market versus the percent sold, sales price trends, local crime stats, school and shopping information and a list of professionals that they do business with to help make your real estate transaction as seamless as possible.
Experience – While a certain amount of experience is important, it should be only one of the things to consider. I’ve known of experienced agents who become lazy after years of selling real estate, and I’ve seen newer agents who are highly motivated and eager to earn your business in hopes of future referrals.
While this info is not all inclusive, if you are thinking of buying a home or selling the one you already own, please rely on me to recommend 3 or 4 agents for you to interview, so you can choose the one that you can relate to and will understand your real estate needs.

Friday, January 31, 2014

Gift Money - What you need to know BEFORE you get help with your down payment.

If you're getting gift money to use for a down payment on your new home, here are a few things to remember:

The "Donor" of the gift must be a family member, close friend, employer, labor union, charitable institution or governmental agency. (Acceptable donor sources can vary across loan programs, so always tell your loan officer the source of any gift funds.) Donors must prove they have the ability to provide you with the gift by providing a copy of their bank statement, a copy of the canceled gift check and/or a signed letter from their bank saying the funds are available.

The "Gift Letter" is a form we will provide. The donor will need to complete it with basic information and a signed statement that the funds are a gift with no expectation of repayment.

The "Transfer" must be documented carefully. Make a copy of the gift check and deposit slip or of confirmation of the wire transfer. Deposit the gift in the account you're already using for verification of funds to close. DO NOT combine this deposit with any other incidental deposits. Provide either an online update or the next account statement to show that the deposit cleared into the account.

Some programs allow for the entire down payment to be in the form of a gift. Others may require that you have at least 5% of the purchase price from your own funds. As these rules can vary or change at any time, never hesitate to consult with us for the specifics as they relate to your transaction.

While the documentation requirements may seem excessive at times, please remember that the underwriters are simply following the rules to assure that your down payment is not borrowed and that any allowable gift funds are coming from acceptable sources.

And remember, if you have any questions about the mortgage process, just ask me!

Sunday, January 26, 2014

What Real Estate Agents Need to Know About the Qualified Mortgage Rules

The Consumer Finance Protection Bureau (CFPB) has created a Qualified Mortgage Rule (QM) which goes hand-in-hand with Ability-to-Repay rules (ATR), both of which took effect on Janury 10, 2014.

In a nutshell, here’s a simplified explanation of what QM is all about and how it will affect you and your borrowers when applying for a mortgage loan.

The Mandatory Product Features for all Qualified Mortgages (QMs) are as follows:
  • Points and fees are not supposed to exceed 3% of the loan amount based on the following:
    • The 3% limit is for loans that are $100,000 or higher
    • $3,000 for a loan amount between $60,000 and $99,999
    • 5 percent of the total loan amount between $20,000 and $59,999
    • $1,000 for a loan amount between $12,500 and $19,999
    • 8 percent of the total loan amount for loans less than $12,500
  • No risky features are allowed, such as negative amortization, interest-only, or balloon loans
  • Maximum loan term must be 30 years or less.

The three main categories of a QM loan are as follows:
  1. General Definition of QM Loans – any loan that meets the product feature requirements with a debt-to-income ratio of 43% or less
  2. Types of QM loans – FHA, VA, Conventional (Fannie Mae; Freddie Mac) and USDA
  3. Small Creditor Category of QM loans – If a mortgage company, small community bank or credit union that has less than $2 billion in assets originates 500 or fewer first mortgages per year AND holds the loan in their portfolio, the 43% does not apply, but they must still verify the borrower’s ability to repay the loan.

What does this mean to you and your clients?
  • Underwriting will be more strict
  • More documentation will be required
  • Pre-approvals become MORE important than ever before
  • Re-verification of income, credit and assets will be required before closing
Some lenders will be offering Non-Qualifying Mortgage loans, but you can be assured that the lender will make sure that all Ability-To-Repay requirements are met. An example of a Non-QM loan would be a Jumbo Mortgage with Interest Only payments.

What would you like to know about Qualified Mortgages or the Ability-to-Repay rules?

Monday, January 6, 2014

All Credit Scores are Not the Same

Credit scores are one of those things that has consumers (and sometimes lenders) scratching their heads and saying “How did they come up with THAT credit score?”

The one you hear about the most are FICO scores (acronym for the Fair Isaac Corporation, the creators of the FICO score). It’s the one that most mortgage lenders use as one of the benchmarks to see if you qualify for to refinance or purchase another home. Usually 3 scores are provided and the lender uses the middle score as the basis for granting (or denying) a loan.

The thing about FICO scores is that the credit score may vary from lender to lender. Why? Because over the years, Fair Isaac has updated their credit scoring model software (best estimate about 85 times) but the credit bureaus who buy the software from Fair Isaac do not always update their own software. One lender could be using the latest version while another lender’s model is several years old.

However, not everyone uses FICO scores as a guide. Here are some other credit scoring models that are used:

Auto Loans: If you apply for an auto loan thru a dealer, they have developed their own credit scoring models which are completely different from those used by lenders.

Insurance Companies: Your insurance premium you pay for homeowners or car insurance also depends upon the credit score model that insurance companies use. Oh, and it will vary with different insurance companies.

Vantage Scores: If your occupation/employment requires you to be “licensed” (especially in the financial services industry) and one of the requirements to obtain (or maintain) your professional license, Vantage Scoring model software is used.

Free Credit Reports: According to law, you are entitled to one free credit report (per bureau) every year. While it won’t be exactly what lenders see when they order a credit report on your behalf, it will be “in the range” and is a good indicator of what to expect.

As I mentioned, you are entitled to one free credit report—PER BUREAU. Go to and you can request one credit report from EACH of the bureaus listed.

A word of caution! Be careful when signing up for offers to provide you with a FREE credit report. If you are asked to enter your credit card number, what you are really signing up for is a credit monitoring service—that may cost you over $300 per year.

Please let me know if you’d like me to review your credit report. I can make suggestions on how to increase your credit score. Sometimes it just takes a little tweaking to increase it by 25 to 50 points.

Tuesday, June 4, 2013

10 Commandments After Applying for a Mortgage

10 Commandments when Applying for a MortgageSo, you've gotten pre-approved to purchase or refinance a home and your loan officer has begun processing your loan.  Everything on your application will now be verified, and re-verified by your loan officer, a processor and an underwriter before the final approval to close on your loan. (They will call your employers to verify employment, order records from the IRS to verify past income and expenses, verify your payments and balances haven't changed on any debts, verify your savings/checking accounts haven't had any large unexplained cash deposits or balance changes, and many other things right up to the day your loan is to close and are sometimes re-verified up to 30 days after by the investors who will buy your loan.) Any changes from the time you were pre-approved to the time you close can impact whether you receive that final approval or not.  The following "10 Commandments" have been passed around us loan officers for years and will really help you from being heartbroken, denied or delayed toward the end of the process:
  1. Thou shall not change jobs or become self-employed.
  2. Thou shall not buy a car, truck or van unless you plan to live in it.
  3. Thou shall not use your credit cards or let your payments fall behind.
  4. Thou shall not spend the money you have saved for your down payment, obtain gift funds.
  5. Thou shall not buy furniture before you buy your house.
  6. Thou shall not originate any new inquiries on your credit report.
  7. Thou shall not make any large deposits into your bank account.
  8. Thou shall not change bank accounts.
  9. Thou shall not co-sign for anyone.
  10. Thou shall not purchase anything until after the closing.
Some things happen in life, which are outside your control (layoffs, broken cars, medical emergencies, etc.)  If ANYTHING changes be sure to call your loan officer before you take action, to see if your loan can still be saved, the new documentation which may be required  and how long the process might be delayed. Never try to hide anything from the lender - it always gets discovered before you close.  

If you have any questions about your particular circumstance, please feel free to contact me and ask! 

Monday, May 13, 2013

What documents do I need to get a mortgage?

Document Checklist

Going through the mortgage loan process to purchase a home or refinance a mortgage can seem like a daunting task these days. After providing document after document, some borrowers joke that their loan officer will ask for their blood type or first born child next. I admit, lenders do require a lot more documentation since the bubble burst – but it is also for your own protection. It is helpful to keep in mind that your loan officer and the underwriter each WANT to approve your loan, and they need your assistance to do so. It will help you to be prepared ahead of time, with the documents listed below for each person on the loan, so that you are not scrambling through file boxes or piles of paper, paying for copies of bank statements you threw away, asking your employer for old paystubs, etc. Start organizing these things before you speak to a loan officer:

  • Paystubs - most recent 30 days
  • W-2’s - Most recent two (2) years 
  • Federal Tax Returns – Most recent two (2) years of return, all schedules 
  • List of Employers  - Include all jobs in last the last two years, with start and end dates. The lender will need the Company name, local address, phone number and human resources contact name in order to verify employment.

  • Disability or Social Security – We will need any award letters showing your expected monthly award 
  • Child Support or Alimony – If you intend to use these as income to qualify for a loan, the lender will need a divorce decree or support order (all pages), showing the terms and that the support will continue for at least 3 years. (For example: If you have child support order, stating that you will receive child support until your son reaches the age of 18, and he is currently 16, , the lender cannot use that income.) 
  • Rental Income – If you own investment properties, the lender will count the net profit (or loss) you claimed on your last two (2) years tax returns. Some deductions you claim (such as depreciation or large repairs that are considered a one-time expense) can be added back to your rental income.
  • Dividend Income – You must be able to document a two (2) year history and that the income is likely to continue for at least three years beyond the closing. This can usually be proved with a statement of the account, showing that there are sufficient funds to continue receiving dividends.

  • Bank Statements - Two (2) months most recent statements for any checking, money market, and savings accounts. Provide all pages of the statements, even if some are blank.  
  • Other Assets - Two (2) months statements for any 401k, Retirement, Stocks, bonds, etc. Provide all pages of the statements, even if some are blank. 

  • 2 Year Address History - A full two year history of all addresses at which you have lived
  • Verification of Rent - The name and phone number for all landlords in the last 12 months. If you make rent payments to a person (rather than a business), we may need to show 12 months of cleared rent checks – so be sure to make your rent payments with a check and keep copies of the cleared checks. If you have lived rent-free, we may need a letter stating so.
  • Verification of Mortgage – If you currently own a home, the lender will need to verify that the most recent 12 months mortgage payments have been made on time.
  • Other Real Estate Owned - If you own any other properties, we will need to verify the mortgage payment, property taxes and homeowner’s insurance payments. (This can be accomplished with a current mortgage statement.) If you own any properties free and clear, we will need the address, amount of annual property taxes and homeowner’s insurance.  

  • Copy of your Insurance Declaration Page - OR insurance agent’s name, phone number and your policy number, so that they can verify your insurance is adequate and order a new declaration page, with the new mortgagee clause.  

  • Previous Bankruptcy – The lender will require copies of your bankruptcy papers, all pages. (This can also help you to prove that certain credit lines were discharged in the bankruptcy, as the credit report is often incorrect.)
  • Previous Foreclosure or Short Sale – We will need to verify the date that the property was sold to another party. 

It may seem like a lot of work to prepare everything up front, but a good loan officer will require it early on, before anyone (you, your realtor, appraisers, home inspectors, processors, underwriters, etc) spend time or money on the transaction. Often, a careless or inexperienced loan officer will skip some of these steps in the beginning. They may simply ask for a paystub or a credit check and tell you you’re approved. Just know that a mortgage is never that easy, regardless of the lender. Imagine having your moving truck all loaded up for your new home, only to find out that your loan is later denied! It happens - a lot!

Nationwide, the percentage of applications that result in approved loans, called a “Pull-Through Rate”, is at about 50 percent for refinances and 60 percent for purchases. That means that 40-50 percent of loans that were sent to an underwriter did not pull through to the closing table! Because my business depends on referrals (i.e. happy clients, realtors, builders, etc), my Pull-Through Rate has to be well above 95%. This is why I ask for things in the beginning and help you avoid heart ache in the end. You don’t want to be in the half that never makes it to closing!