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

 

 

 

 

Mortgage interest rates will go much lower in less than a month. Wait, interest rates will go higher in a month. No, wait, interest rates will go much higher by the end of the year, possibly to double digits.

So, are you confused?  Where are you getting your information from? I have heard both from the news media and the government that they will lower rates. We heard back in November 2008 that rates would go to 4.5%. But you can go to 4.5% now, but depending on the loan amount, the LTV, and your credit scores, it could cost you anywhere from 3 to 4 points to get that rate.

 

 

 

 

Well, thanks to the new stimulus bill, there is major talk about lowering the interest rates. And some reports are stating as low as 4.0%. Wow, that would be awesome, or would it?

Okay, let's clear the air. In my opinion, lower rates will hurt us than help us. I have my reasons, yet I am not the only one that thinks this. Please click on this link to hear some scary news. Yahoo Finance  It's around the 3:59 minute mark to 5:20, that is the part about interest rates. And I wrote about some of this here... please read : I need my quick fix, please pass me that 4.5% interest rate  And I think this is very important, which was talked about in the video.  Inflation vs deflation. Is it criminal?

 

 

 

 

 

So what is the argument by some that lower interest rates are good? It lowers your payment. In my opinion, how many of you would agree that it would just allow more people to buy a bigger home instead?  Instead of saving that money monthly. And if that was the case, then it would just help those to refinance. But wait, anyone that had interest rates like 7.25 percent and or higher, would have refinanced even 2 months ago, when rates were in the low 6's to high 5's, if it made sense. Ah, those that couldn't before, probably can't now, because of bad credit or no equity in the home.  So this helps those that bought in the last year with interest rates in the 6's.   hhhhhmmmm  Interesting thoughts....

What do you say?  Thoughts?

 

And keep this in mind, don't you have a comfortable payment in your mind?  If not, your loan officer should be asking you this question and not dwell on what you can afford. So, back to the payment. If so, and that payment doesn't change, but a lower interest rate?  You just buy a bigger house and not save that extra money. Yes, there are some arguments on the other side of this fence, but that is for another post.

 

 

 

Conclusion :  So let's think about all of this?  Are you a true blue gambler?  You want to buy a house now, you can afford it, but you decide to wait a month, because you heard that rates will come down even more. What happens if they don't come down? 

You can refinance to a 5% fixed rate with 1 point and that would save you around $200 a month. And you plan to be in the house for over 5 years. But wait, you don't want to do it now because rates are coming down. The media and government said so. But what happens if they don't?

 

Food for thought....  We all have heard that the government are buying up MBS's, which are mortgage backed securities. But what we don't know are what coupons they are buying. Are they sinking our money into the 4.5% coupons?  The 6.0% coupon? How about the 6.5% coupon. The federal government doesn't set rates for mortgages. Interest Rates can change daily due to the different market changes. My thought on that?  Even if the gov't bought the MBS's, which would lower rates, how long would the rates stay low? We have already been through this a few times. Rates would stay low for a day or two and then climb back up.

 

My advice?  Stop listening to the media, politicians, gov't, and those in the mortgage industry that will tell you to float your rate. If you can refinance now and it makes sense, do it.  If you had planned on buying, that you can afford it, and that you feel positive about it,.... then do it. Don't wait for false hope, it could bite you in the arse. Talk to a mortgage professional about this, to see what your options are now. But if someone tells you to float now or wait later?  You be the judge of that when or if that day comes. Do you want to take that gamble?

 

 

On a side note, here is a post written by Colleen Craig - Giving those of us that missed this information the other day..

Economic Stimulus plan helping the ones that actually paid their mortgage?

 

And a post by Robert Ashby, why he thinks rates will go up and soon. I fully agree with this and have stated that rates will be in the 7's and 8's by the end of the year. I think this is spot on ... Please read :

Inflation: Hidden Giant Waiting to Drive Mortgage Rates Higher?

 

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2008-2009 Tax Credit for First Time Homebuyers : 2008 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger

 

FHA loans in the last 12 months have become one of the most used types of mortgages. There could be several reasons for this......

 

• less money down - 3.5% down
• lower credit scores - anywhere from 600 down to 550.
• less than perfect credit
• no credit at all
• 2 years out of a bankruptcy
  

Well, things have been changing. No, HUD hasn't really been changing the FHA guidelines, but the investors and banks have been changing them. We are in a credit crunch crisis. Just in the last few months, I have been getting a few calls and e-mails from people telling me that HUD's website says this or that. I have actually had a few people argue with me a little, because of what it's says on HUD's website. Just a word to the wise, FHA doesn't do the mortgages.  They don't service them, they just insure them. It all comes down to the investors and those that sell back to Wall Street.

Now, I will admit, you can't believe everything that you read or hear. There was a rumor going around that credit scores were going to be mandatory across that board at 620 and above. This is incorrect. But you should be aware that this could happen. I just had a realtor e-mail me from Florida today, telling me that her Countrywide rep. told her that her son would have to wait another full year for a FHA mortgage even though his Ch. 7 bankruptcy will be discharged for 2 years in April of 2009. He has saved his cash, reestablished his credit, and has credit scores of 680. This actually sounds like one of my easier deals.

Conclusion - You really need to be choosing your loan officer very wisely now. Someone that is on top of these changes daily, not monthly. FHA loans do differ from lender to lender. In some cases, if it sounds too goo to be true, then it might not be true. If your lender is taking over 30 days to get a FHA mortgage approved, you might want to seek someone else. And keep in mind, just because it's on HUD's website, doesn't mean that it can be done anymore. Investors and lenders need to make sure that the loan is sell-able on Wall Street.

Disclosure -  One comment that seems to pop up that does irritate me. FHA loans don't take forever. A very good loan officer and company can do them in 2 weeks. But many of us like to have 30 days to process them. But they don't take 45 days or longer, not unless they have a credit issue, need to get their credit score up, or might be waiting for a raise. And if your loan officer was good, they would have discussed this with you. It's called setting your clients expectations to a certain level. Please read : Are your expectations met as a client or a realtor?

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2008-2009 Tax Credit for First Time Homebuyers : 2008 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger

     

All Mortgage Brokers are bad, they are the Devil. Now wait, who said that? Ah, rumors and in my opinion, are from those that don't fully understand the ins and outs of the mortgage business. A topic regarding mortgage brokers and mortgage bankers that has been grossly argued based on opinion, always seeming to fail in pointing out hard core facts.

Just recently, I read a blog on Active Rain that stated that there was a hidden agenda by banks to put brokers out of business. What irritated me was this was based on opinion, but never mentioned. Here is what was written on this same subject.

"Are mortgage brokers being squeezed out of the business as, one by one, the nation's largest lenders move to block them from offering their loans?"

This authors answer?  

"You bet they are."

 

 

   Picture from www.istockphoto.com

 

Here is another part of this person's blog that is very opinionated, but sounds like fact because of how it's stated, because they are a good writer.  Here is what was stated....

 "Oh, sneaky lender, you. I almost forgot you have other ways of getting rid of mortgage business."  And then they include a list to defend their opinion : They basically said, banks can :

• raise credit scores
  
• increase underwriting requirements
• make getting an appraisal more difficult
• slow down the approval process (major opinion based on my opinion by Jeff Belonger)
• raise rates (huh? This is done through Wall Street. It's called coupons and risk pricing - each investor has different rates - this has to be one of the worst statements I have read without an explanation)
  

 

 

Now, before I go over my thoughts and opinions, a little about me :   (short resume)

• Over 16 years in the mortgage industry.
• Worked for big companies such as Norwest Mortgage, #1 when I worked there (now Wells Fargo) and Columbia National Mortgage, #51 when I worked there (bought out by American Home Mortgage, and then closed shop).
• Over half of my career, I have worked for the mid sized mortgage bankers, which I will describe below.
• I have worked for 2 brokers in my career
• I have worked as a manager of an office, overseeing 10 loan officers.
• I was a small partner of a company, which allowed me to review the companies books, truly understanding how a company is operated and what it takes.
• I now run a net branch.
• Lastly, I was privy to many banks portfolio's on Wall Street in 2008, looking at the non-performing loans that totaled in the 100 billions. So I can see what failed and why.
  

 

 

First we need to define the different types of lenders and their roles :

• Bank - One who controls their own money and that is FDIC approved. This could be such large lenders as Bank of America, Wells Fargo, Countrywide, and others. These companies can change their guidelines at any time. But here is a key point. Even though they service their own mortgages or those bought by brokers, they still need to make sure that loan is sell-able on Wall Street. Please read : How mortgages work - Investor Style

• Mortgage Banker - aka Correspondent Lender (by Rhonda Porter) - One that underwrites their own loans, closes in their name, and uses their own funds. They typically sell the loan about 15 days after the loan is closed. They can also act as a broker if they don't want to take full risk. And just a fyi, Bankers usually have 5 to 10 investors that they can sell their loans to. Jack Guttentag, a well-known mortgage blogger & educator, with 25 + years experience in mortgages. What is a correspondent lender?

• Mortgage Broker -  One that has the least amount of risk on the table. Yes, they have many lenders that they can sell to, and they use this as their main selling point. But again, so does a mortgage banker.
  

 

 

 

 

Let's go over the basic misconceptions based on my opinion and for the fact that I interviewed 23 loan officers in the last week about this same subject.

 

     Who takes greater risk?  The bank takes the greatest risk, because they are servicing the loan. The mortgage banker is next, because the bank they sell to can say that they don't like the loan even after the banker closes the loan on their own warehouse line. Or if the loan would would default in the next 2 months, the banker has to buy back the loan. The broker in most cases, gets to wash their hands of the loan once the bank buys it from them, which is at time of settlement. The broker even gets their check at that moment also for services rendered.

     Banks can raise credit scores to hurt the broker from doing business. This person failed to state that this goes the same for the mortgage banker and the bank themselves. Yes, some banks might have a slight difference with credit scores for their retail branches. But it goes back to risk. Keep in mind, even these banks sell pieces of that mortgage on Wall Street. Just because the bank services that mortgage, doesn't mean they own the whole thing.

 

     Banks making the appraisal more difficult. Again, this was based on an opinion. This could be a whole blog on its on. The main theme again, risk. That bank needs to make sure that this loan can be sold on Wall Street.

 

     The Banks are raising rates to get rid of mortgage brokers -  How can one make this statement? Very misleading. As mentioned, we all get basically the same money from the same place. No matter if you are a broker, banker, or bank. Yes, some rates vary from investor to investor. But the brokers get the same pricing as a banker or even your large mortgage banks do. This statement is very false in my opinion. Please read my comment to Rhonda Porter for more on this.  My Comment

 

     I have 10 to 20 lenders that I shop with to get you the best rate.... - This is more commonly stated by mortgage brokers, to make you think that they can get you the best deal with the lowest rates. Well, a mid sized mortgage banker can do the exact same thing. What defines a mortgage banker is that they actually underwrite the loan, meaning that they have more control. They don't have to rely on someone else that could say no at any time. PS..  no matter who you are, everyone gets the money from the same place, just through different channels.

 

 

Picture below from www.istockphoto.com

 

Summary :  The biggest argument of lately is that mortgage brokers are being forced out of the industry. That can be ones perception and opinion, but reality must set in. Again, who takes the greater risk?

 

Overall, yes, mortgage brokers have been at least 50% of all business done in the last 2 decades or so. And yes, banks have made money because of this. How do you think Countrywide was propelled to the number 1 lender in America? More than 50% of their business came from mortgage brokers. But why are banks tightening? Based on past greed by banks with major losses and the ever changing economy.

 

 

 

The bottom line, don't let opinion that sounds factual fool you, and should be based on reality. And again, this is not just my opinion, but the opinions of my peers in the mortgage industry, both as brokers and bankers. Maybe the questioned should be, Mr. Broker, why don't you want to be a banker?  Possible answer?  Because it costs more money and there is a lot more risk. The main theme that was misplaced was "Risk." 

 

 

 

For more opinions on this subject, please read :

 

The Explanation of Mortgages : From the beginning of time...... A must read for a better understanding on how mortgages are sold.

Mortgage Banker vs Mortgage Broker -- What is the difference????

Mortgage Brokers vs Mortgage Bankers - Do you want the truth?

 

 

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2008-2009 Tax Credit for First Time Homebuyers : 2008 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger

 

 

I was picked to do the Blogger's Choice selections just recently. Here is my interview with Midori Miller prior to my selections. :

Hey All You Single Ladies-Jeff Belonger Takes On The Member Spotlight!

 

Now I have the honor of picking 5 to 8 blogs for the Blogger's Choice Selections group. These blogs are in no particular order and this is like a mini week in review.  I hope you enjoyed them as much as I did.

 

 

 

 Debe Maxwell -

Shoulda'- Woulda'- Coulda'

 

A very realistic post on Listings and how to list your home. The expectations of you, the seller, she be realistic, especially in today's market. And Debe does a very good job of giving her expert opinion.

 

 

Tom Ferry -

Lesson Learned From A Hall of Famer

An excellent blog in my opinion because of the simple message that Tom explains in this post. The message? "have you completed or finished your unfinished business?"  Such things as completing your web site or blog site, returning phone calls, etc, etc

 

 

Lenn Harley -

WHERE DO YOU PLAN TO ADVERTISE YOUR SERVICES IN 2009 - Chapter 3.

Yes. Lenn is mentioned often on AR, but why not, when you write as good as she does. This is a must read series, not just one blog post.  Lenn gives her insight of 20 + years as a realtor.

 

 

Larry Bettag -

Why Your Posts Need to be Quality Now More than Ever!!!!

A very positive post for those newbies on Active Rain, that may get frustrated after they have written what they thought was a very good blog. It's sometimes not easy to find your voice right away. Larry talks about writing quality and being persistent. please read this one...  and it took Larry several months prior, but he is proof of finding his voice and now putting out quality posts.

 

 

 

Kristen Wahl -

The Law of Attraction: Musings of a Former Skeptic

Will all of the negative news out there surround the Stimulus Bill, this is an excellent post that is not only positive, but keeps you in a "thinking positive" mode.

 

 

 

Teri Eckholm -

House Moved Across Frozen White Bear Lake--This Ain't No Fish House Either!

Anything is possible in life and if you don't believe this, read what Teri wrote in regards to moving a house across a frozen lake. If you haven't read Teris's blogs in the past,read them now, she always has some entertaining blogs from her area, Ham Lake - MN.

 

 

Jeremy Blanton -

Dear Real Estate Agent, Maybe We need to Learn from Miss America!

Here is another lesson learned from watching a tv show. Jeremy shares what can be done in today's market when it comes to listing new homes. Basically, throwing out the old and bringing in the new, new ideas that is.

 

 

 

Ron Withers -

Usury......We Hired The Fox To Guard The Henhouse!

Ron always has a way with his titles just as he has with his way of think, always sharing a good opinion. I guess being an officer in the Navy has helped in who Ron is also, sharing his political views also. Ron, thanks for your years of Service.

 

 

 

Allison Stewart -

Maybe Your House Just Isn't That Into You

Some very easy to understand wise words of advice that buyers should read. So, what does turn a buyer on?  Read these ideas and thoughtful tips by Allison.

 

 

 

 

Okay, so shoot me, I picked 9.  Just giving back my love to those that continue to share so much in what they write. I hope you enjoyed these and Happy Valentine's Day to those with loved ones in their lives. Don't

 

 

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2008-2009 Tax Credit for First Time Homebuyers : 2008 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger

 

 

I am always surfing the Internet and there always seems to be those blogs and informational pieces that are not just opinion, but completely misleading and wrong. And for the most part, that's how rumors start.

When it comes to FHA loans, I will state this.... I am not god, I am not perfect, and I don't know everything. But I will say this, I would think that I am very good at what I do, that I am knowledgeable, that I think outside the box, and if I don't know something... I will ask and research it first before I write about it. Do I make mistakes?  I think we all do at some point in our lives. But when you put out information that is not even close, that you didn't confirm its source, or that you are just winging it... then I have a major problem with that.

Overall, it's bad enough with the many changes in regards to FHA loans and conventional loans.

 

 

 

 

So, what have I seen that has been misleading or blatantly incorrect?

• Here is a biggie.  Credit scores -  Yes, there are some investors that have changed the minimum scores to 620, but this is not nationally nor across the board. I just read a blog here on AR last week that stated that credit scores were going to change to 620 by 02/12/09 on all FHA loans and VA loans.

Here is the sad part about this, I asked this person where they got his information from and he stated that he received it from two of his reps. Secondly, he was questioned on how much FHA business that he does and he said that he isn't even FHA approved. But that he wanted to put the information out there. I then asked him to fax me or send me the so-called letters that his reps. gave him pertaining to this mandate. That was over 6 days ago and nothing.

Here is the reality of the situation. HUD/FHA never sent out a new mortgagee letter, that would give any or all changes. Congress never passed anything new regarding credit score changes. And this would leave any and all investors and lenders that sell their loans on Wall Street. When it comes to this part, there are no real rules, but that the investor can change and or add any guideline as they see fit in order to be able to sell that loan to other investors or to Wall Street.

 

• There was a rumor going around that you now need 2 months reserves on all FHA mortgages. This is absolutely not true and it is case-by-case, depending if you need a compensating factor on the loan to make it approved.
  

 

• Locking interest rates - I actually had two different clients tell me in the last 10 days that their loan officer told them that they couldn't lock into a rate until 5 business days before settlement. In today's market, you can lock in for 60 days and some will lock in you in for 90 days. But you can lock in your interest rate once you have a property and have filled out a full application. Now, there are exceptions to the application part, depending on your loan officer. But you do need a property with a physical address. There might be a Federal Credit Union that would be different, but for the most part, in most cases, there are no more shop and lock programs as there were in the 90's.

 

• Lastly.... FHA loans don't take forever to close. That is usually because of an inexperienced loan officer or lender. FHA loans can still be done in 2 to 4 weeks. I have closed many in 6 business days, but those were emergencies, because the other lender dropped the ball. Preferably on any type of loan, FHA or conventional, it is nice to have 3 to 4 weeks so you can properly process the loan. Processing a mortgage is not like buying a car.  Just food for thought.
  

 

Overall, I just wanted to point a few things out that have disturbed me when surfing the internet, blogs on Active Rain, and from listening to other loan officers. FYI :  Don't always assume when shopping for a loan. It doesn't hurt to do a little searching and ask questions. If the loan officer doesn't seem sure, question them some more and call someone else, it could end up saving you thousands of dollars. Just don't shop yourself out of the market. Please read this : Shoopers that shop themselves right out of the market

 

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2008-2009 Tax Credit for First Time Homebuyers : 2008 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger