Worst high priced mortgage lenders, and why

Worst high priced mortgage lenders, and why

Here is a basic list of some of the worst mortgage lender choices, and why:

YOUR BANK

Your bank is generally a poor choice because they understand that you believe simply because you’ve had a checking account there for years, that they will treat you better and give you a good deal. The reality is just the opposite. Because they know you are already comfortable with them, you are not likely to shop for a mortgage loan elsewhere. The reality is this means they know they can get away being higher priced. They also have higher expenses, like advertising and all the buildings they own, so their margins need to be higher.

BIG INTERNET LENDERS

internet lendersJust because you’ve seen them on TV or hear their radio advertising a million times saying how Quick In Loans they are, does not make them a good choice. Actually what makes them a bad choice is because of their advertising. You see, all lenders get their money from the same source on the same day at the same time.  All lenders have essentially the exact same closing costs, and all lenders are basically going to underwrite to the same guidelines. If they spend millions of dollars everyday advertising, and I don’t, who needs to have a higher profit margin?

YOUR REALTOR’S IN HOUSE LENDER

Real estate companies over the past 15-years or so have all started adding their own mortgage divisions, and have their real estate agents aggressively push you to use their affiliated companies (mortgage and title). They use convenience (they are across the hall), or fear (other lenders won’t close on time) to get you to use their internal mortgage company. Rarely is the real estate agents internal mortgage company the best deal, because again, they know you are now less likely to shop.

GOOD VERSUS BAD REALTOR REFERRALS

It is completely OK for your real estate agent to suggest a mortgage Loan Officer to you. But if they are suggesting their own company, be very suspicious of their motivation for doing so. If they are suggesting an out side mortgage company, it is usually because they know, through experience that this Loan officer does a great job, has low costs, and great interest rates.


Home construction slowest since Sept

Home construction slowest since Sept.

newconU.S. home construction fell in June to the slowest pace in nine months, a setback to hopes that housing is regaining momentum and will boost economic growth this year.

Construction fell 9.3 percent last month to a seasonally adjusted annual rate of 893,000 homes, the Commerce Department said Thursday. That was the slowest pace since September and followed a 7.3 percent drop in May, a decline even worse than initially reported.

Applications for building permits, considered a good indicator of future activity, were also down in June, dropping 4.2 percent to a rate of 963,000 after a 5.1 percent decline in May.

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Mortgage rates down slightly for week ending July 17, 2014

Minnesota mortgage ratesMinneapolis, MN: Freddie Mac  today released the results of its Primary Mortgage Market Survey(R) (PMMS®), showing average fixed mortgage rates moving down slightly to remain near historic lows for the week ending July 17, 2014.

Mortgage Rate Averages

  • 30-year fixed rate mortgage averaged 4.13 percent with an average 0.6 point for the week ending July 17, 2014, down from last week when it averaged 4.15 percent. A year ago at this time, the 30-year FRM averaged 4.37 percent.
  • 15-year fixed rate mortgage this week averaged 3.23 percent with an average 0.5 point, down from last week when it averaged 3.24 percent. A year ago at this time, the 15-year FRM averaged 3.41 percent.
  • 5-year adjustable-rate mortgages (ARM) averaged 2.97 percent this week with an average 0.4 point, down from last week when it averaged 2.99 percent. A year ago, the 5-year ARM averaged 3.17 percent

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Mortgage rates were little changed amid a week of light economic reports. Of the few releases, industrial production rose by 0.2 percent in June, below the market consensus forecast. Also, the producer price index for final demand rose 0.4 percent in June, rebounding from a 0.2 percent decline the prior month.”
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Freddie Mac’s survey is the average of loans bought from lenders  last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.  Follow this link to view today’s best MN, WI, and SD mortgage interest rates.


Top credit report move that will wreck your mortgage approval

Top credit report move that will wreck your mortgage approval

Getting a mortgage loan these days is overly complicated, and annoyingly paperwork intensive. This is simply a response to the market collapse that started a few years ago, when it seemed like everyone could get a loan.

If your credit report isn’t perfect, a super common “trick” that credit repair companies and consumers try is to dispute credit accounts.

While disputing incorrect credit accounts is OK, it IS NOT OK right before applying for a mortgage

Disputing a charge, balance, payment history, or any aspect of the credit obligation places the account in the dispute status. This adds  “in dispute” to your actual credit report until the dispute is resolved.

So Why Is This A Problem?

The powers that be who make underwriting guidelines (Fannie Mae, Freddie Mac, FHA, VA, etc) have decided that whenever an account is in dispute, your credit report no longer provides a 100% accurate picture of the persons credit history.  Therefore all the computerized systems used to underwrite the initial aspect of your file ignores accounts in dispute, and your file either becomes automatically rejected, or is switched to what is known as a manual underwrite.

Manual underwriting dramatically changes maximum debt ratios, program guidelines, and the level of documentation needed. Manual underwriting could easily take a file that should be approved, and turn it into a denial.

The solution:

If you are thinking of buying a home and have credit challenges, you need to work on credit repair when you start thinking of buying a home, not once a loan officer says you have issues. Everyone has an idea of where their credit sits. Act early.

Next, don’t dispute anything or everything on your credit report. If an account is negative, but accurate, disputing is a waste of time.  I’ve seen people try disputing their bankruptcy!  Really??

Finally, you can talk to the credit bureau to remove the dispute item comments from your credit report in most cases.  It may take some time, so again, plan ahead. Do it before you’ve fallen in love with your dream house!

 

 


Tips to Improve Your Mortgage Approval and Credit Score

Tips to Improve Your Mortgage Approval and Credit Score

When you are looking to purchase a home, or refinance your exiting home, your credit score is very important.  One of the first things your lender will do is check your credit report to assess your creditworthiness.

As everyone knows,  the better your credit score, the more options you have, and the lower the mortgage interest rates will be available to you.

fico_graph

However, if you have a very bad credit score, it could be causing you to be offered high interest rates on your mortgage that could cost you thousands more in higher payments over the years, and worse yet, cause you to be denied.

Improving your credit score before getting a mortgage loan will ensure that you get the best interest rate possible.

But what can you do to improve your credit score?

Here are a few tips that can help you improve your credit score:

Be Patient – Fixing Credit Takes Time

A good analogy for improving credit is a little bit like losing weight. You might see a big jump right away, then getting to your full goal may take awhile. But the long term benefit of your new good habits that will make all the difference in the future

When it comes to all of the ways to improve your credit score, there can sometimes be something you can do quickly, and other take a long time. Just like weight loss, there are no magic quick-fixes.  The best way to rebuild your credit is to be responsible over time.

Check Your Credit Report For Errors

Your first step is to review your credit report.  Your loan officer is a good place to start, or you can get a copy from www.CreditKarma.com or www.AnnualCreditReport.com. Check it over carefully for errors, and contact the original creditor to correct those errors.

Pay Down debt

Credit cards cause a lot of score damage. This is primarily because the scoring model looks at your credit limit, and then how much you have currently on the card. Think of it in terms of 1/4 percent.   If you have less than 25% of the limit used, this is considered good utilization of credit.  If you are over 75%, or worse yet, max’ed out, you are killing your credit score.

Set Up Payment Reminders

Late payments spread all over your report can be one of the biggest negative factors bringing down your score.  If you have issues paying in a timely manor, simply set up automatic payments, and set up alerts on your accounts to be notified by email or a text whenever your payments are due.

Major Derogatory Items, like Bankruptcy and Foreclosure

Needless to say, these items serious hurt your credit score.  The most important thing to do to restore your credit is to get or maintain current and active credit. You see, the scoring model will see the old nasty negative items.  But they want to see how you are TODAY.  Have you gotten back on track?  If you don’t have current credit, your score will never recover.