FHA Mortgage Expert - Tri-State Area - New Jersey/PA/Delaware

Halloween in Philadelphia is fun, yet can be a frightening times. The history in Philadelphia is intriguing enough, but did you know all the spooky and scary stories that involve Philadelphia's history? I found it very interesting when researching that information.The Spirits of '76 Ghost Tour tells you such scary stories surrounding the Liberty Bell and Independence Hall. You also have the Ghost Tour of Philadelphia that not only takes you on ghostly tours throughout the City of Philadelphia, but which explores several graveyards with some Philly history.

With so many different attractions and events surrounding Halloween in Philadelphia, it can be hard to choose from. So many attractions such as Terror Behind the Walls at the Eastern State Penitentiary, to the Fright Factory, or even the Bates Motel that has one of the scariest hayrides in America.

Do you dare?

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Realtors should know basics about Mortgages in New Jersey– Especially FHA Mortgages

When it comes to realtors giving in depth advice about mortgages, it does crawl under my skin. Some of you know this, and some of you disagree with me.  Some realtors think a realtor should go as far as to pre-qualify a buyer. One reason from a realtor was that he could do it better than many of the loan officers. Sure, there are bad loan officers and good loan officers. I can make the same statement in regards to realtors, and in most other professions. But lets put all of that aside, because that is not what this post is about.

So why do I bring this up then? I will say that a realtor needs to know the basics when it comes to mortgages. They are suppose to be knowledgeable when showing homes, right? How does one usually buy a home?  Usually with a mortgage. And in today’s mortgage arena, there are really only four types of mortgages.

Conventional Loans – easiest of all appraisals and what is required.

FHA Loans – appraisal issues are not as strict as the rumors that say FHA is harsh. Maybe back in the day, prior to 2002. The VC sheet was even dropped from the appraisal almost a decade ago. Broken doors, cracked windows, cracks in the foundation,  chipping and pealing paint, and mold are usually the biggies.

USDA Loans – people need to be aware that not only does the lender underwrite the appraisal, but that the USDA needs to review the appraisal.

VA Loans – in between conventional and FHA requirements.

Each mortgage is different, and some are more lenient than others when it comes to appraisals. But here is the part that a realtor should focus on. Many sellers and listing agents want at least a pre-qualification letter from the buyers mortgage company. It makes total sense and is not unreasonable. The pre-qual letter should state what kind of mortgage it is, right? Well, if my pre-qualification letter says that the buyer has been pre-qualified up to x,y,z; with a FHA mortgage, then that means that buyer is getting a FHA mortgage.

Here is the dilemma or issue at hand. I know of a buyer getting a home with a FHA mortgage and the sales agreement was written as an ”as is” purchase. Which means that the seller will do no repairs. Well, the house is not only a mess, but several things are wrong with it. The main issue is that it has mold, and they knew about this because there was a previous buyer, in which that transaction fell a part. Secondly, there are like eight electrical outlets that needs covering and an electrical box. Anyone with little experience regarding FHA mortgages would know that this would need to be addressed and fixed prior to settlement. Regarding the mold issue, the realtor said FHA doesn’t get worried about mold issues. The other issue is that the buyer is using a friend as their realtor who really only does commercial deals. So you can see why that realtor didn’t even pick up on these “red flags”, even though the house is being sold “as is”.

Here is a picture showing you one of the outlets. You tell me what you think.

As you can see, not only does the box have to be covered, but that the wires are exposed.

Conclusion : Realtors should know the basics about mortgages, especially FHA mortgages, since this is about 40% of all mortgages in today’s real estate transactions. In some areas, FHA mortgages are even 50% or higher in specific markets.

Let’s try to look at this another way. Would a buyer really want to buy the property if it has some major issues? Shouldn’t a realtor be focused on the condition of the property prior to listing it? If the realtor sees some potential “red flags”, and they aren’t sure, wouldn’t it be wise to call a few lenders to find out. As a sales person, shouldn’t that person know his or her product? If selling a home, not only knowing the condition of the home, but understanding the basic appraisal requirements for the basic mortgages?  Just some food for thought. Because I have always said, “the stupid question is the question not asked if it has been thought about.”

So in my honest opinion, realtors should know the prime basics of mortgages in New Jersey. The primary focus should be on appraisal issues.

Mortgage 101 in New Jersey – Getting to know the borrower’s wants and needs

In today’s delicate world of mortgages in New Jersey and any where else, getting a mortgage not only takes understanding, but patience. I am still finding many loan officers trying to fit that round peg into that square hole. Let me explain….

I currently have a client whose realtor got him to talk to her loan officer. This loan officer has my borrower pre-qualifed for about $35,000 more than I do. How can there be such a difference?

Before I get into the differences, let’s try and establish a pattern of questions that should be talked about, when a loan officer interviews a borrower.

• What mortgage payment in New Jersey would you feel comfortable with, to include your property taxes and homeowners insurance. Please give me an honest and realistic amount that you would not want to exceed.
• Secondly, what areas would you prefer to live in. This is very important, because it comes down to the different property tax amounts. Depending on why you would want to live in that town or neighborhood, would help determine your monthly mortgage payment because of the property taxes.
• My next question would be the type of property that you would want to purchase. Whether it would be a single family dwelling, a townhouse, a condo, etc. This helps me determine your payment as well, because there could be association dues or PUD fees based on the type of property and location.

In my opinion, I consider these 3 questions to be the most important that should be asked in the beginning, besides their name, credit scores, credit history, and income information. I actually get to those sets of questions next.

So, with that addressed now, let’s get back to my story.

My borrower wants to live in one of two places, because one of his main focuses is to be in a good school system. Keep in mind, they have 1 child at 8, another at 1, and one on the way. How do I know all of this? I got to know my borrower.

Now, the areas that they are interested in, the property taxes run about $6,000 a year on $180,000 properties. This other loan officer has them pre-qualified at $200,000, but using property taxes of $5,200. To be realistic, if buying a $200,000 home, the property taxes average around $7,000 a year. As you can see, this could become a huge issue for the borrower when shopping for a home in their respective areas, to later find out that they don’t qualify based on higher taxes. But it gets better.

In my very first question, I asked what mortgage payment that he would feel comfortable with. If I used the $200,000 property, even at the unrealistic property taxes of $5,200, he would be about $117 over his comfort zone regarding the mortgage payment. With the correct property taxes, not only does he not qualify for a mortgage, but his monthly nut would now be about $267 more than what he would be comfortable with.

Conclusion : In my 18+ years in the mortgage business, even after the government tightening down on loan officers with their licensing requirements since the beginning of 2011, I keep seeing these basics get over-looked more than they should.  It shouldn’t be about who can pass a test, even though the test itself is only about 30% mortgages directly. But about asking the proper questions and preparing the borrower.

I have a borrower right now who has a 617 credit score and that their current loan officer is telling them that they need a 620. Once they get that 620, they can close. Settlement was suppose to be June 30th and he keeps saying it will be soon. yet when I reviewed their current credit, it doesn’t mean the credit guidelines. I wrote about this example that happens more than it should. Please read - Your credit score is more than just a number -

Hey, it’s a dog-eat-dog world out there. I know it’s easy to trust someone when they say such words as : “trust me”, “no problem”, I promise”, “I guarantee”, etc.  Who do you trust?  Get to know your loan officer, listen to how they talk, and how confident they sound. Not just the sales words that one might use. I call these words The Red Flags of mortgages.   If you listen close enough, you can sometimes hear someone contradict themselves. Just food for thought.