More Here - Not so much a FAQ as a Blog
Currently we work primarily with Amtrust Mortgage and Plaza Home Loan. We are signed up to originate for several other lenders including Direct Mortgage, Sierra Pacific Mortgage, and Everbank.
Why do we concentrate on these, and not many more? First and foremost is the level of trust we have in these companies. Amtrust in particular has distinguished themselves by offering competitive prices and the best systems for closing loans. Lydian offers very good pricing, and good service. Suntrust is a new relationship. They offer a very wide range of products, and have hired some employees that we have a lot of trust in.
We are on the distribution list for many other companies. We monitor their rates, products, and pricing, and will build relationships when it makes sense for us and our clients.
We don't currently offer HELOC's, without a new first mortgage as well. The market for second mortgages has been hit particularly hard by the credit crisis.
We suggest people contact Compass Bank for HELOC's. They are easily the cheapest source around at the moment, though this may change. We would be happy to provide a contact if you wish.
Not really, for several reasons:
First, when you lock you're getting a guarantee from the lender that you'll get that days rates. The lender operates as if you are giving your guarantee that you'll take those rates, though you are not committed. The lender in turn makes investments on the assumption that a certain percent of that days locks will close. Moving the loan does real harm. Now the reality is that the lender knows they will lose some of their locked loans, and many will renegotiate.
Second, once a loan is in underwriting time is of the essence. Changing locks resets the clock, and means starting over.
Finally, rates are upwardly elastic, and downwardly inelastic. That is to say, rates move upwards very quickly, but are typically slow to move downward. While you will often see advertisements heralding the drop in rates, remember the purpose of those advertisements is to generate business. There is no strong regulation preventing a promise of lower rates even as rates are in fact rising.
With all that in mind we will work to renegotiate rates, but won't chase rates. We have designed our business with the aim of maintaining our integrity towards the client. We expect integrity in return, and our investors deserve it as well.
Quite often I am asked why we need certain documentation... bank-statements, tax returns, the blank page 4 of the 4 page bank statement.
Here are two reasons and one explanation. First, there is a long history of fraud in the mortgage industry, and that accounts for a great deal of the paper work we deal with. Second, while we portray ourselves as a service industry, the mortgage industry is in the business of making good investments that will be paid back. Getting away from this simple principal has created a great deal of trouble for the US economy. We try to minimize what we ask for, we never ask unless we expect to need a document.
Regulations dictate that for mortgage loans these documents must be given to you within three days of application. Since we must give them, the only proof we can provide that we have performed this duty is your signature.
Signing either form does not commit you in any way, you are merely acknowledging that you have received the documents.
Largely it's a matter of how quickly we receive information.Start to finish we've completed loans in three days. That's unrealistic, and unneccessary, for most cases, but motivation counts for a lot.
Here are some typical turn around times for a loan transaction.
There's lots of wiggle room in there. Quickly getting the application and initial documents saves time. Getting all the initial documents can eliminate the need for submitting conditions. We can order the appraisal at any time. Getting conditions in quickly saves time We try to push the pace as much as possible, but if the fuse is short we'll need help.
O.K. This really isn't a frequently asked question, but I have hopes that it will be.
In the mortgage industry, as in any interest paying or receiving industy, there is a theoretical point of what "the current rate" is. It's theoretical, because there is no such thing as a rate. All rates are available, what changes is the cost of those rates. In effect rates don't change, but the price of each rate does. As a practical matter some rates are so expensive, and some rates are so high that there is a range from which you may choose. Or, more traditionally the loan officer chooses for you.
Here's what happens within a range of rates. You can have 1%, but it'll cost you. You can have 10%, and the market place would be so happy to get your payment that investors will pay a premium for the right to collect such a payment. In the mortgage world, the payment you make to obtain the 1% rate is a discount payment. The payment that is made for agreeing to a 10% rate is a premium. Specific to mortages it is a yield spread premium for brokers and a service release premium for bankers. Somewhere in the continuum of rates, is a rate called par. It's called par, because it doesn't cost a discount, or pay a premium. As in golf it is the target that is seldom hit. In the mind of the masses it is, "the rate". Consumers seldom have any knowledge of what the current par rate is, because of the nature of mortgage advertising and sales tactics.
Our philosophy is that you should know what the wholesale rates are. If you choose a higher rate you should have the use of the premium to offset costs, we therefore credit it to you. It makes a great deal of sense to do this in instances where the consumer is trying to save on settlement costs, expects to move in the near future, or in refinance situations. It is the only way of doing a "no cost" loan.
First some rules. In order for a loan to be truly no-cost the new loan must not be greater than the amount outstanding on the old loan. Second, no-cost must mean third-party fees are paid for as well.
What a no-cost loan doesn't promise, and shouldn't. You will have to bring money to closing. This amount should be about equal to your monthly payment. The reason is that you will owe interest on the old loan, and some interest and escrow deposits on the new loan. Sometimes the new escrows can increase your costs beyond your current monthly payment. Typically this is wholly offset by the refund you receive from your old lender. Since there is a months gap until you are made whole we will sometimes advance the refund to you. If we do an advance, you must pay it back when the refund comes in.
So if I have to bring money how is it a no-cost transaction? We try to settle these at the end of the month. The reason is that the funds you bring to closing replace the payment you would have made to your current mortgage company. Your new payment begins on the month after the month you close in (if you close in April your first payment will be in June). Some mortgage sales people will tell that, you are skipping a payment. You are doing no such thing. You're just paying someone different. It's only no-cost in that you aren't paying more than you are already scheduled to pay to your current lender.
How are the costs paid and how do we make money? Through premium financing. As noted under, "What is a Yield Spread Credit?" the market pays us for rates above a certain amount, called par. We use that money to pay your costs. By doing a no-cost loan you are foregoing the current opportunity to pay costs and get a lower rate. If it saves you money on a monthly basis to do a no-cost, it usually makes sense to hold onto your cash rather than buy down the rate. Further, if you get a lower rate and payment and, you have not invested any cash in the non-recurring costs, your really have not taken any risk.
When somebody else is paying, such as a seller or even a generous agent. Or, when it makes the deal work.
The other, more common, time is when you know your horizon for being in the property is long term. When you pay the costs to get a lower rate, you do so expecting to recoup those costs by paying less interest, usually that means a lower payment. It takes time for the monthly savings to equal the amount you paid, on average it seems to be between 5 and 7 years. Having a plan for how long you will own the property should influence this decision.
I do not. For two reasons, one legal, the other practical.
First, I am licensed in Colorado and only in Colorado. I could join a net branch operation with a federal charter that would allow me to step around state laws, but that would limit my ability to provide low rates and secondly would result in poor service which is the second reason. I do not feel like I can provide very good service where I don't know the local standards. I take a good deal of pride in providing accurate estimates. Not knowing the local rules means I would consistently miss fees such as local taxes, attorney costs, or title fees. In my opinion it is best to work with someone you can reach out and strangle if you have to.
I have a great deal of faith in my fellow UMB's. If you are looking for a loan outside of Colorado please consider one of the following for your mortgage services.
I was, but am not now.
I still abide by the same principals: full disclosure of Yield Spread, endeavor to act as your agent, behave in a transparent fashion. As such I am still committed to my flat fee pricing and offering the ability for borrowers to see the wholesale rates I receive and the mark up I place on them.
I applaud what the UMBA's stated goals are, but wish the group would be more active and push for those goals. In my time as a member I saw efforts to increase membership and efforts to get group discounts. What I really wanted to see was press releases, fast acting public relations, and letters to representatives that push the notion that the key to reforming the mortgage industry is slay the myth that we all have different rates. The commitment for that just didn't seem exist.