The Digital Mortgage Truth

The Digital Mortgage truth is much different than the hype.

Minneapolis, MN: It is 2018. The number of people who physically step into a bank or mortgage lender to do a home loan application is dwindling everyday. The vast majority of complete an online loan application on a desktop computer or iPad, or even apply via a Smartphone.

Digital Mortgage

Technology allows lenders to do more parts of the process electronically that ever before, including electronically signing application documents, secure uploading your documents, and even apps that shows the current status of your application 24/7.

Very cool technology, with this process now commonly referred to as a ‘Digital Mortgage’.

I see many places claiming using a digital mortgage will save you a ton of money. Mainly because somehow this streamlines the process, blah blah blah.

Taking the loan application online is only one small part of the mortgage loan process.

You still need to supply W2’s, pay stubs, bank statements, tax returns, etc. We still need processors, underwriters, and a large number of  back office staff.

While yes, we can now get some  of these documents electronically, I haven’t done a single loan yet without needing the client to supply at least s half of these standard supporting documents themselves.

You still need, and still want to have a conversation with a licensed professional Loan Officer to discuss your wants, needs and goals. To analyze your situation, to determine the correct loan for you, to answer any questions, and walk you through the process.

Yes, you can complete a loan application in 10 minutes on your phone, but that is a long long long way from being fully approved and actually successfully closing a mortgage loan.

There is no fast rocket way to circumvent the bulk of the mortgage process. So don’t be fooled or make a lender choice simply because of a gimmicky claim of a digital mortgage process. That just isn’t reality – yet. It is the largest financial transaction of your life. Don’t entrust it to your cell phone.

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Ready to get started?

It’s easy. Simply complete the Online application.  You’ll be applying directly with me, Joe Metzler, an experienced, multiple award winning Loan officer with over 20-years in the the business. We lend in MN, WI, and SD. Learn more about me HERE.

Mortgage lender in MN, WI, SD


Dangers of Dual Agency on real estate transactions

The dangers of dual agency real estate transactions, and using the same real estate agent to buy your home that is also selling the home is a little more troubling than most home buyers are aware.

It’s common to walk into an Open House, look around, and start talking to the real estate agent listing the home.  If you don’t already have your own agent, but love the home, you may be tempted to just use the agent selling the house.  While completely legal, and while it may seem OK on the surface, it is wrought with possible issues.

The first thing to know is that real estate agents commonly refer to this situation as a ‘hogger’. This simply means they get to keep all of the commission the seller is paying for themselves when they represent both the seller and the buyer. Typically when there is a separate buying and selling agent they split the commissions. On a pretty standard 6% listing fee, the listing agent would keep 3.3% of the commission, and pay 2.7% to the buyers agent. If they can double their pay, an agent might be over  incentivized to close a deal no matter what.

Many buyer think that a dual agent will reduce their commissions, saving them money. While they can do this, it rarely even happens.

But the bigger concern element is that the duty of the agent in this situation is to the seller. They have no duty to the buyer. An example would be that the agent knows the seller is willing to take $10,000 less on the house, but the agent has no duty whatsoever to tell share this confidential information with you just because you are using the same agent.

Also, without your own agent, you have no one advising you if the listing price is even reasonable. If you have your own agent, your agent will generally review similar properties to tell you if this one is priced low, about right, or high. The listing agent will likely defend the listing price as it, meaning you could easily over pay for the home.

TIP: Although you may feel like you have to make the decision whether to accept a dual agent on short notice, don’t be tempted. It’s possible to find a buyer’s agent to step into the transaction and assist you in a matter of hours. Best to always have your own buying agent. Someone fighting for YOU!

If I’ve pre-approved you for your mortgage loan, I’ve worked with hundreds of good real estate agents in the Minneapolis / St Paul area, and can easily get a great one to call you right away.

PROHIBITED BY LAW

A much lesser known, but to me more troubling issue is that when you hire a real estate agent to list your home, and the same company represents the buyer, your agent is prohibited by law to negotiate on your behalf?

WTF?

Yes, its true. It is because of a Minnesota law called ‘Dual Agency’, and companies with hundreds or even thousands of real estate agents end up having many ‘in-house’ transactions. This forces sellers to sacrifice their exclusive representation because even though you have two different agents, they work for the same company.

Before entering into any of these types of dual agency agreements, however, you want to understand the legal implications and how it might affect your ability to get the best possible deal in buying or selling a home. You’ll see dual agency notifications in the piles of paperwork you sign when making an offer, but virtually no one buying a home understands what it means.


Use lender credits to pay closing costs

Minneapolis, MN:  The biggest challenge for most home buyers, especially first time home buyers, is coming up with the required down payment.  While most people understand down payment, they are shocked to learn their are mortgage closing costs. Wose yet, is discovering how much closing costs can add up to.

Mortgage loan closing costs cover many items, including appraisal, credit report, state deed taxes, title company costs, title insurance, lender costs, and more.  Plus you also have something known as pre-paid expenses which need to be paid too, including buying your first years home owners insurance policy, and one time pro-rated property taxes, which are based on when property taxes are due, and what month you close on your new home.

While closing costs and pre-paid items are actually separate, it is very common for people to combine both of them together, and simply say ‘closing costs’.

CLOSING COSTS ARE NOT 3%

I hear it day after day after day, that closing costs are around 3% of the purchase price. This generalized statement couldn’t be more wrong!

Closing costs vary based on many factors, including the homes purchase price, state, property taxes, loan program, and the buyers choice of how to pay for them.

This misinformation comes from the fact that conventional loans only allow for a home buyer to roll into the loan closing costs up to 3% of the purchase price.

Many loan closing costs are based on the loan amount, and the rest are the same regardless of the homes price.  For example, standard loan origination costs are 1%.  So 1% of a $100,000 loan is just $1,000, while a $400,000 loan of course equals $4,000.

Items like the appraisal may be the same for both the $100,000 home or the $400,000 home. While the cost is the same for either house, the $400 appraisal fee is 1% of a $40,000 home, but only 0.10% of the $400,000 home.

Another good example are Title Company charges. Standard Title Company closing fee is usually a flat fee, but the required title insurance varies based on purchase price.

HOW TO PAY FOR CLOSING COSTS

Mathmatically, the best way to pay for your loans closing costs will always be to pay cash out-of-pocket. Realistically, especially for first time home buyers, this makes the amount needed out of reach.

Mortgage loan programs always require you bring your down payment, but closing costs can be rolled into the loan a few different way.

  1. Seller paid closing costs
  2. Lender Credit
  3. Combination of both

I dislike the term ‘Seller paid closing costs’, as many people thing the seller is paying it, and therefore it is free. The reality is that while the purchase agreement says the seller is paying, the person actually paying is the buyer. You are just paying over time.

For example, assume the seller has listed the home for $200,000. You make a full priced offer at $200,000, but your offer also asks the seller to pay the maximum conventional loan allowed closing costs of 3% ($6,000).

If the seller says YES, many people think you got closing costs for free. But think about it.  The seller actually netted just $194,000 in their pocket. So you could have made an offer for $194,000 and paid your own closing costs. The seller got $194,000 either way, but you rolled your closing costs into the loan, opting to pay the costs over time, versus up-front today.

Lender credits is another tool. With lender credits, the lender will increase your loans interest rate in exchange for reducing your out-of-pocket closing costs today.  You can choose a small rate increase with a small lender credit, all the way to absolutely no closing costs whatsoever with a much larger rate increase.

You may also see lender credits employed in a different way too.  For example, many lenders will scream things like ‘no lender fee’, or maybe ‘free appraisal’ if you use them. All they are doing is increasing the interest rate a bit to offset normal costs – but not telling you.

The most common one we see is no loan origination options, which will generally increase a 30-year fixed rate loan by 0.25%.

ARE LENDER CREDITS GOOD OR BAD?

Increasing your loans interest rate never sounds good, but does thing make lender credits bad? Think of them as a financing tool, and your personal situation?  Do you have the cash to pay your own closing costs? Maybe you have the money, but would rather use it to improve the home.  Lenders credits might still be a good choice.

Do you not have the money? Then it may be a matter of using lender credits, or not buying the home at all. In this case, a small amount all the way to complete no closing costs via lender credits may be your sole option.

Click here to apply online

We lend in MN, WI, and SD.  Equal housing lender. NMLS 274132

Lender credits


Dispelling VA loan myths

Minneapolis, MN: VA home loans are one of the greatest benefit to our U.S. Military personal that most vets will ever use. Dispelling VA loan myths that prevent them from using their benefits is therefore very important.

VA mortgage loans in Minnesota, Wisconsin, South Dakota. VAMortgageMN.com

VA loan Myth 1):  All veterans are guaranteed a VA loan.

Reality: Veterans are NOT guaranteed a VA loan.   All loans, even VA loans have fairly standard underwriting guidelines that all applicants must meet, including debt-to-income ratios, credit scores, The confusion generally starts with that the Veterans Administration does NOT actually do loans. Instead, the VA guaranty is to the lender that actually makes the loan. If the veteran defaults, the VA guaranty will pay the lender some or all of their a small percentage of the loan that lenders do if the veterans defaults.

Veterans need to provide a VA Certificate of Eligibility to the lender, which tells us how much VA Guaranty you have available, and if your service in the military allows you to be eligible. If you work with us for your VA loan, we are usually able to obtain your certificate for you.

VA loan Myth 2): VA loans do not have a down payment.

Reality: Almost all VA loans have no down payment requirement, but if you are buying a very expensive home that is over the local area conforming loan limit, you may have a down payment requirement. For almost everywhere in the country, the current no down payment limit is $453,100 (as of this article date).  Click here to see how to calculate your minimum VA loan down payment for expensive homes.

VA loan Myth 3): VA loans have no closing costs.

Reality: ALL mortgage loans have closing costs. Appraisal, credit report, state deed taxes, title insurance, first years home owners insurance, and lender related costs. But with a VA loan, just like many loans, you can cover closing costs four ways:

  1. Pay yourself out of pocket
  2. Seller paid closing costs
  3. Increase the interest rate to offset costs
  4. Any combination of the above.

The combination of all the options is generally what happens. So with most of the VA loans I personally do, you are able to buy with very little out-of-pocket. Under $1,000 is extremely common.

VA loan Myth 4): VA loans require excellent credit

Reality: You don’t have to have perfect credit scores for VA loans, but just like all other loans, as your credit scores go down, your odd’s of loan approval go down too.

As I previously mentioned, the Veterans Administration does not actually give you a loan, authorized lenders do. VA just gives lenders insurance. So while the VA guidelines to lenders says you can potentially get a VA loan with no credit scores, or even super low score, basically no lenders actually offer that.

If your middle credit score is over 640, you are probably OK. Once you drop below 620, expect a lot of no answers UNLESS your overall situation is actually pretty good, but there is some sort of minor fluke item on credit giving you that low score.

Ready to buy a home with the awesome VA Home loans?

Simply contact your local VA loan expect for the best experience, and avoid the large national online VA lenders.

VA lender MN, WI, and SD

For VA loans in MN, WI, and SD – Simply click here to complete the online VA loan Application, or call us at (651) 552-3681 to speak to one of our VA Loan Experts.

Thank you for your service!

 


Mortgages Unlimited named Star Tribune Top 150 Workplace 2018

Maple Grove Minnesota based Mortgages Unlimited is proud to announce that for the 3rd year in a row, they have been named a Star Tribune Top 150 Workplace in Minnesota.

In need of a mortgage loan to purchase or refinance a 1-4 unit residential property, contact our licensed home loan experts by calling (651) 552-3681, or visit our web site at MortgagesUnlimited.biz

Mortgages Unlimited, in business since 1991, is one of Minnesota’s top non-bank Mortgage companies offering a full suite of home loan products, including, but not limited to standard conventional loans, FHA loans, VA loans, USDA rural loans, investment properties, jumbo loans, first time home buyer, down payment assistance, and even bank statement for proof of income loans.

Offices in St Paul, Bloomington, Woodbury, Stillwater, and Maple Grove

Equal Housing Lender, NMLS 225504.


Get a gift for down payment.

Minneapolis, MN:  Looking to purchase a home in the near future?  The lack of down payment is a big hurdle for many people. But did you know you can get a gift for down payment? Most loan programs allow for a gift for either some, or all of your homes down payment, including FHA loans and conventional loans.
Gift for down payment

WHO CAN GIVE A GIFT?

The gift typically comes from Mom and Dad, but officially the rules say the gift must be from a relative. This is defined as any individual who is related by blood or marriage, adoption, or legal sponsorship.
Even a fiancee or domestic partner is OK. An unrelated person who shares a committed relationship with the recipient of the gift, and who currently resides in the same household as the recipient, AND intends to occupy the home with the recipient is also OK.

WHO CAN’T GIVE THE GIFT

The gifting person man NOT be, or have any affiliation with the Real Estate Agent, the seller, the builder, or any other interested party to the transaction.

DOCUMENTING THE GIFT

Your mortgage company will always need to document and prove the gift to verify it came from an allowable donor, and to paper trail the money.
At a minimum, both the gift giver and recipient will need to sign a industry standard gift letter that the Loan Officer will provide. It states that the gift is truly a gift, and will never be paid back.
From there, additional proof depends on when the gift was given, how it will be transferred, and what loan program will be used. Common additional items are a copy of the gift givers bank statement where the money came from to prove they had the money to give, proof that any personal checks cleared the bank, and proof that the money is truly now deposited into the recipients bank account.
Cash is never allowed.

THE GIFT FOR DOWN PAYMENT BOTTOM LINE

Gift for down payment has always been, and likely will continue to be a super popular way to come up with your down payment money, especially for first time home buyers.
When getting pre-approved, tell your Loan Officer you are thinking of using gift money. They will answer your questions, and go over the specific guidelines for gift money on the loan program you are planning to use.
Thanks Mom and Dad!


What happens if the house appraises for less?

Congratulations. You’ve enter the housing market, gotten mortgage pre-approved, and made a successful offer on your dream house. But what happens if the house appraises for less than the purchase price?

In the ever changing Real Estate world, today we have a problem with a shortage of homes for sale. This means it is likely that a seller will get multiple offers well above the asking price. Sounds great for the seller, but this also means there may result with the appraisal, commonly known as “coming in low.”

There are many reasons why an appraisal may be low. In rapidly changing markets, home prices continue to increase which is something makes it difficult for appraisers. Maybe the agent made a mistake. Maybe the buyer pressured the agent to list it higher than it should have been. Maybe the appraiser made a mistake. Maybe multiple offers drove the price too high. Maybe the buyer needing to roll in closing costs pushed the sales price over the market value. Who knows. It happens, and it happens a lot more often than buyers and sellers may realize.

There are many other reasons too. If you get the news that the appraisal came in lower than the sales price, don’t panic. Almost all of the deals still close!

Understand the whole idea of the independent appraisal is that an unbiased, highly trained third party is there to protect the buyer and the lender. The buyer doesn’t want to pay more than fair value, and the lender is obviously concerned about their collateral.

Real Estate, Minnesota, Minneapolis, for sale, mortgage rates, interest rates

So What To Do If  The House Doesn’t Appraise For the Sales Price?

The first thing is to review the appraisal to see if it has obvious errors. I’m not talking opinion of value differences, I am talking actual errors. For example the house is 3000 square feet, and the appraiser has it at 2400 square feet.  Assuming an error, bringing it to the appraisers attention usually results in a quick fix.

TIP: If there is a measurement error, 99% of the time, the listing had the size too big. Few agents actually measure, while 100% of appraisers measure.

Have the agent gather what they believe are better comparable properties than the appraiser use. Don’t just give addresses. Give a detailed explanations of why they believe the appraiser should consider these homes instead.

TIP: Rare is it that the appraiser didn’t already consider the comparable you just submitted.

If there are obvious errors, or obvious poor comparible choices, there is the possibility of obtaining a new appraisal with a different appraiser. There are rules and guidelines to this process. It is not an easy route, plus the buyer would need to pay for the 2nd appraisal.

Options to make low appraisal deals still work?

Typically there are four routes when the appraisal is less than the sales price.

  1. Walk away. Any agent worth anything has written an appraisal contingency in the purchase agreement. This happens maybe less than 2% of the time.
  2. Buyer can pay cash out-of-pocket for the full difference between the purchase price and the appraisal. The down payment and all loan parameters will be based off the lower appraisal. This happens maybe 3% of the time.
  3. Seller drops the sales price to match the appraisal. They may piss and moan, but this happens in probably 70% of the cases. This is because cancelling doesn’t work for anyone, and putting the house back on the market is no guarantee you won’t get a similar appraisal down the line.
  4. Seller and buyer split the  difference somehow.  A common route is the seller lowers the price a bit, and the buyer pays a little more out-of-pocket. Another common route is that is the seller was paying some of the buyers closing costs, maybe they reduce or eliminate seller paid closing costs. This options happens maybe 25-% of the time.

Hopefully my math worked out to 100%, but as you can see, most real estate transactions that have an appraisal come in low still get to the closing table.

 


Get Pre-Approved Before You Start Looking

Get Pre-Approved Before You Start Looking for a home

Minneapolis, MN: People often make the mistake of starting a home search without knowing what they actually qualify for. Falling in love with a $400,000 home and finding out you qualify for $200,000 can be heartbreaking. Thinking a loan approval will be easy, only to find out you have issues, or don’t qualify for a program you think you do, is another concern.

Virtually no Realtor will show homes to clients who have not been pre-approved, and virtually no seller will accept any offer without a pre-approval letter for this very reason. Being pre-approved gives both you and the seller comfort that final approval for your loan should be fine.

Pre-approval gives you, your agent, and the sellers confidence in knowing can get a loan, and that you are shopping in the correct price range for your income and payment comfort level.

We recommend getting lender pre-approved about 100 days before you would like to move. For example 100 days before the end of your apartment lease. This give you plenty of time to correct any minor issues that may cause loan approval issues, and plenty of time to find a home without just settling because of time concerns.

Finally, understand there are two levels of pre-approval. The more common one is what is known as Loan Officer pre-approval. This is where only your Loan Officer has reviewed your application information, documents, and credit. Generally this is acceptable in the vast majority of cases, but can be problematic when new or inexperienced Loan Officers make mistakes in their assessment.

Certified Underwriter Pre-Approved from Mortgages Unlimited, Inc
Certified Underwriter Pre-Approved from Mortgages Unlimited, Inc

Mortgages Unlimited goes a step beyond, and also offers full Underwriter Pre-approvals, known as our Certified Pre-Approval. This means your application has been completely reviewed by an actual Underwriter, who has given their blessing on your credit, incomes, etc.  This only leaves us to have to finalize your application on the exact home when you find it (purchase agreement, appraisal, and title review).

Certified Pre-Approval  is significantly better than a basic pre-approval, and gives you a distinct upper hand when negotiating on your dream home – especially if you are in a multiple offer situation.

To become pre-approved for a home loan on properties in Minnesota, Wisconsin, or South Dakota, please fill out our secure online application, or call (651) 552-3681 to apply over the phone, or to schedule an in-office appointment.

Get pre-Approved for your home mortgage loan in Minnesota, Wisconsin, South Dakota
No Obligation to apply, and see what YOU qualify for.

 


Bank statement loans = YES

Minneapolis, MN:  Not every potential home owner fits the cookie cutter guidelines for most traditional loans. The mortgage industry had plenty of alternative options, including bank statement loans, stated income, no proof of income and more, right up until the housing crash in 2007.

Government mandated changes left many homeowners with no loan options.  Slowly, the non-conforming loan industry is making a comeback, albeit looking much different than years ago.

Stated income loans, and no proof of income loans do not exist, but a popular option that HAS returned is using your bank statements as qualifying income.

Bank statement loans

These loans come in many varieties, but generally consist of the following basic requirements:

  1. Must be self employed
  2. Use 100% of personal bank statement deposits as income
  3. Use 50% of business bank statement deposits as income
  4. Higher credit scores
  5. Loans of 80% loan-to-value or less
  6. Interest rates 1% to 2% higher than standard loans.

There is no one set of rules, like you find with standards loans that all lenders use for things like FHA, VA, Fannie Mae, Freddie Mac, etc. Because of this, you will find all sorts of slight variations between lenders.

But the good news is that at least there are some options again for those home owners who don’t fit the traditional loan model.

We offer bank statement loans for properties located in Minnesota, Wisconsin, and South Dakota. Click here to apply online.

Click to apply online

Equal Housing Lender. NMLS 274132. Not everyone will qualify. Not an offer to enter into an interest rate lock agreement.

 


New 3% down payment option for home buyers

Minneapolis, MN: We all know one of the biggest obstacles to buying a home is the lack of down payment.  Many first time home buyers have the credit, and income to handle their own home, but just can get over that down payment hurdle.

FHA Home Loans have always been a popular first-time home buyer choice, because the program only requires a 3.50% down payment.

3% down payment home ready, homepossible, homeone loan

Both Fannie Mae (HomeReady) and Freddie Mac (HomePossible) have just 3% down conventional programs. These existing programs have both income guidelines based on the properties location. You must also be a first time home buyer, which is defined as someone who has NOT owned a property in the past three-years.

Both HomeReady and HomePossible require the buyer to take first time home buyer education classes, and for doing so, you get a slightly better interest rate, and slightly cheaper monthly mortgage insurance rates. If you meet the qualifications for these programs, they are both pretty awesome deals.

But if your income is too high, or if you’ve owned a home in the last three years, you still have a low 3% down payment program offered by Fannie Mae, that has been around for a few years.

Freddie Mac has just announced their version of the 3% down payment program for everyone, which they are calling HomeOne. The program starts July 29, 2018.

Very similar to Fannie Mae’s program, the new Freddie Mac program does NOT have any income or geographic restrictions, and it is not restricted to first time home buyers. The program is only available for single family (one unit) properties.

Home ready, Home Possible, Home One loan applicationAs with all home loan programs, the new HomeOne mortgage down payment requirement is just one of many aspects used to determine loan approval, including credit scores, debt ratios, property, and overall ability to safely afford the home payment.

 

We lend on these programs in Minnesota, Wisconsin, and South Dakota. Just complete the quick and secure online application to determine if HomeReady, HomePossible, and now HomeOne is right for you!.

 

 


The Basic Mortgage Types

The Basic Mortgage Types

When buying a new home, not only do you have to find that perfect home, you also need to find that perfect mortgage loan. Many people use the internet to learn about loan options, terms, rates, and cost options.  It can easily become overwhelming. It helps to have some basic understanding of loans, so when your Loan Officers discusses options, you can help us choose the right loan for you and your family.

FIXED OR ADJUSTABLE MORTGAGE

Fixed-rate mortgages (FRM): Straight forward, as you pay the exact same monthly payment for the entire loan term. Taxes and insurance changes might change your monthly payment, but the loan itself doesn’t change. Common fixed rate loan amortization terms are 30, 25, 20, 15, and 10-year terms, with 30-years being the most common.

Adjustable-rate mortgages (ARMs): With adjustable rate mortgages, you start out with a fixed period, after which the loans interest rate may adjust up or down depending on what is going on in the interest rate market. Typical fixed rate period are 3, 5, 7, or 10-years. When the fixed rate period ends, you enter into the adjusable rate period, which will carry you through the remaining term of the loan.  There are caps to the yearly adjustments, and lifetime adjustments to the rate, so be sure to discuss with your Loan Officer these caps. Finally, there is an index, and a margin. The index is what the ‘index’ the future adjustments are made based on, while the margin is what is always added to the index to come up with your new rate

Adjustable loans have gotten a bad reputation, but they really shouldn’t. They are a great tool for the right person. Popular reasons to take an adjustable loan are:

  • lower payments versus fixed (at least initially)
  • more affordable today
  • you plan on moving within the fixed period, or soon thereafter

POPULAR LOANS

Standard conventional loan: The plain Jane of the mortgage world. Nothing fancy, tried and true. Down payments starting at 5% down.

VA Home Loan for active or former U.S. Military personal has no down payment requirement up to the local conforming loan limit. Above the local limit, a small down payment is required. VA loans also do not have monthly mortgage insurance, making them one of the best loan options available.

The USDA Rural Housing loan is also no down payment, but is available to anyone.  Their are income and location guidelines (house must be rural for example).

First Time Home Buyer Loans: These options typically allow for smaller down payments, like just 3% down, and generally also offer reduced mortgage insurance. A first time home buyer is defined as someone who has not owned a home in the past 3-years. Typically you must attend a first time home buyer education class to get these loans.

FHA Loans are a long-time favorite, as they typically allow for lower credit scores, and have only a 3.50% down payment requirement.

Down Payment Assistance Loans fit a popular situation, where the home buyer has OK enough credit, and can afford a house payment, but they just never seem to be able to save enough for a standard down payment. You usually need to put a little of your own money for a down payment (typically $1,000), and you get an assistance loan to cover the rest of the standard down payment. Home buyer education classes, and household income limits apply.

As one can imagine, there are many variations to these basic programs, and this article only focuses on purchase loans. refinance loans can be different.

My best advice is to not try to figure it out yourself, rather simply complete an application with a local experienced Loan officer, who can review the file to look at all options, to zero in on what loan is best for you.

We lend in Minnesota, Wisconsin, and South Dakota -and we’d love to help you. NMLS 274132

Apply Online
No Obligation to apply, and see what YOU qualify for.

 


How to get the best interest rates or closing costs

How to get the best interest rates or closing costs probably isn’t what you think.
Minneapolis, MN: Buying or refinancing a home? What mortgage company should you work with? What lender offers the best interest rate? Sadly, so much of what you see out there is simple advertising smoke and mirrors designed to capture your attention. 
For example, did you realize you can pretty much pick any interest rate or closing costs you want on your mortgage loan?

HOW THE BEST INTEREST RATES WORK

Want a super low interest rate? No problem.  best interest rates

In many cases, you have the option to pay more money upfront in exchange for a lower rate.  Some refer to this as “paying points,” buts that’s a bit of an archaic term.  Self-annointed gurus used to say “never pay points!” But that’s not necessarily good advice.  Discount (or “discount points”) offers a perfectly legitimate and objective choice to pay more money upfront in exchange for a lower interest rate.   Whether or not the trade-off makes sense to you is fairly subjective.  

In the more intelligent conversations, discount is discussed in terms of “breaking even” or “break even months.”  In other words, if I pay extra cash today, how long will it take for me to break even due to lower monthly payments.  Closer to 10 years?  That doesn’t make sense for most people.  5 year or less, however, and it can start to make better sense.  

All this to say that the discount points required to move down to 1/8% are fairly low for most lenders at the moment.  For instance, paying an extra .5% of the loan amount could get you another eighth of a point lower interest rate, and it would take just over 4 years to break even on that extra expense.  Of course, if you plan to sell or refinance in 3-5 years, this makes no sense. If this is the last house and mortgage you want for the foreseeable future, it’s something to consider.  

Lowest closing costs

HOW THE LOWEST CLOSING COSTS WORK

A similar conversation can be had for paying less in closing costs up-front today. You can choose to pay lower closing costs today, but understand this is simply achieved by the lender raising the interest rate you would get.  Small reduction in costs equal small rate increases, while large reduction in closing costs equal large interest rate increases.

This trade off is know as ‘Lender Credits’

So again, what is the math, and does it make sense? A common lower closing cost quote is a “No Loan Origination” quote. On most fixed-rate loans, you can eliminate loan origination costs, which is 1% of the loan amount by roughly increasing the interest rate 1/4%.

On a $200,000 loan, eliminating loan origination would save you $2,000 today, but a 1/4% higher interest rate will cost you $29 more per month on that $200,000 loan. Simple math gives you a 69 month break even period. If you are in the loan less than 69 months, you win.  Each month after 69, you pay an additional $29.

What is the math calculation on your loan amount?

But wait, even this is too simple. Do you have the money today? Do you want to keep some of that money in your pocket today to use for something else? So again,  Whether or not the trade-off makes sense to you is fairly subjective. 

Lower closing costs in exchange for higher interest rates is also a perfectly legitimate tool for home owners.

THE BOTTOM LINE

Don’t fall for advertising gimmicks. Rates way lower than everyone else, you are buying discount points, but may not know it. Anyone offering ‘no lender fees’, rebates, or any other sort of reduced closing costs are simply increasing the interest rate to pay for it.

The bottom line is simply this. A good conversation with a licensed, experienced, professional Loan Officer over your long-term, short-term, payment and equity objectives, is the only way to determine what is best interest rate for you and your situation.


Is your Loan Officer State Licensed, or simply Registered?

Is your Loan Officer State Licensed, or simply Registered, and how can you tell?

You are about to do the largest financial transaction of your life, a home mortgage loan. What do you know about the person handling it, the Loan Officer?  For most people, the answer is basically nothing, and that should scare you. Many people assume the person answering the phone is a  licensed Loan officers, but this simply isn’t true the vast majority of the time.

While all companies offering mortgage loans must have a license, until the passage of the SAFE ACT in 2008 in response to the housing industry collapse, few Loan Officers had a personal license.  This wasn’t generally a huge problem until the real estate boom began in earnest around 2000, when it seems like everyone was a home builder, a Real Estate Agent, or a Loan Officer with zero schooling, training or experience. As we all know, lots of these people ended up creating a a huge mess in their wake.

With the passage of the SAFE ACT, Congress took steps to tighten licensing and training requirements for Loan Officers. All can agree, this was a great step in the right direction.  Unfortunately, Congress blew it by only requiring a small portion of Loan Officers needing to meet the strict new law requirements.

Differences in Loan Officers

Under current rules, Loan Officers at banks, credit unions, or mortgage companies owned by these entities are NOT REQUIRED to have a personal license. Rather, they simply have to register in the Nationwide Mortgage Licensing and Registry System.

Loan Officers at non-depository lenders, like brokers and non-bank mortgage companies are REQUIRED to have a personal license.

Loan Officer License

 

How To Check Out Your Loan Officer

Doing a little research on your Loan Officer is rather simple, with these two steps:

  1. Go to NMLSConsumerAccess.org
  2. Do an Internet Name Search
  3. Your gut feeling

On the Nationwide Mortgage Licensing System and Registry web site, you are able to enter the Loan Officers name.  The system will tell you how long they’ve been a Loan Officer, what company they are OK’d to work for, any disciplinary action, and if they are personally licensed, or simply registered.

Here is a screenshot of my personal NMLS record, which shows I am a Licensed Loan Officer in Minnesota, Wisconsin, and South Dakota.

Here is the bottom part screenshot of a Loan Officer who is simply registered. You’ll notice it says Federal National Loan Officer instead of listing states they are licensed in.

Next, Do an Internet name search in your favorite search engine.

Do you get any hits? What are they? What do you see?  Nothing? One link to a company web site?  Multiple hits on multiple sites?

Does the Loan Officer appear to be highly respected and quoted with lots of links? A great blog with great informational posts? Probably a good sign of a professional. Can’t find anything, or maybe just a listing on the company web site?  Probably not a comforting sign.

Finally, trust your gut feeling.

While being simply Registered doesn’t make someone bad, and being Licensed doesn’t make someone good, it does help you understand more about who you are working with.

If you see they are simply registered, and have been a Loan Officer for six months, that probably wouldn’t be who I would pick to handle my largest financial transaction. Especially as I think back over 20-years ago when I started as a Loan Officer.  I didn’t know anything, and it took years to gain the needed experience.

If they’ve been a Loan Officer for 10-years, but have been at 10 different companies, you should ask why? Keep getting fired?

On the other hand, regardless if they are registered or licensed, do they seem knowledgeable. Do they seem to have your best interest in mind?  Do they return e-mails and phone calls in a timely manner?

Personally I think the choice is clear.

Who would you rather have working on your largest financial transaction. A Loan Officer with a licensed they must maintain or risk losing it, with years of experience, or someone who is simply registered or new?

While true Loan Officers at banks, credit unions, and mortgage companies owned by banks and credit unions are NOT required to have a personal license, and many will tell you if you ask about their background how they are not required to have a license. Understand there is nothing preventing them from obtaining one. My opinion is if they really are professionals, prove their dedication to the industry by obtaining a personal license and giving the client a level of comfort.

If you are buying a home or refinancing a home in Minnesota, Wisconsin, or South Dakota, and you’d like me to handle your home loan, call me at (651) 552-3681 or just click on this link to Apply Online.

 

 


Rehab Loans to Buy and Fix a home

Can you get rehab loans to buy and fix a home?  

YES

There is no doubt that the current real estate market offers a lot of great bargains on short-sale, foreclosed, and homes in need of some tender loving care. However, many of these homes are in less than perfect condition. Many just have simple cosmetic issues, like ruined carpet, or in need of painting. Others need a new roof, or the previous owner vandalized the house, leaving them with missing cabinets, or missing appliances.

Standard mortgage loans don’t let you financing these homes, but our specialty renovation loan programs do.

These programs allow buyers to purchase a home and roll the cost of repairs or property improvements into the mortgage loan with as little as 3.50% down payment. The new loan is based on the value of the property after the repairs or improvements are completed.

We offer all three major renovations loans. Both the FHA 203k streamline rehab loan, the Full FHA 203k loan, and the HomeStyle Renovation conventional loan.

The programs are also available to refinance and fix up your existing home too.

See how this specialty loan program can help YOU find a home that may be outdated or need some minor improvements to make it the perfect home and get that home in a great neighborhood.

We lend in MN, WI, and SDContact us today at (651) 552-3681 to see if you can qualify for a REHAB PURCHASE AND FIX loan program, and move into the home of your dreams.

Learn more at https://JoeMetzler.com/203k

NOTE: This is NOT available for investors looking to fix and flip homes. That is a different program.

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Ready to get started?

It’s easy. Simply complete the Online application.  You’ll be applying directly with me, Joe Metzler, an experienced, multiple award winning Loan officer with over 20-years in the the business. We lend in MN, WI, and SD. Learn more about me HERE.

 


First Time Home Buyer Class in MN

MN First Time Home Buyer Classes

Minneapolis / St Paul, MN: Buying your first home can be a fun exciting time. It can also be stressful, especially as there is a lot of misinformation spread from well intended friends, family, and even Real Estate Agents.

When it comes to first time home buyers, they are usually told about special programs for first time buyers, and classes you need to take. The first thing to understand, is most mortgage programs DO NOT REQUIRE a home buyer education class, UNLESS you are getting down payment assistance.

Most people don’t want to take a class unless necessary. Therefore we generally suggest you complete a full Loan Application for review to determine if you need a class. There are never any obligations to review your situation.

Free good faith estimate

The second major thing to know is that IF you DO need to take a class, you need to take the correct class. Almost ALL classes put on by a Real Estate Agent, Bank, Credit Union, or Mortgage Company are really only marketing gimmicks designed to get you introduced to those people, so you hopefully use them as your Real Estate Agent or Loan Officer. These classes DO NOT COUNT and should be avoided.

Here in Minnesota, like most other states, to obtain down payment assistance as a first time home buyer, you ARE REQUIRED to attend a Minnesota state approved 8 hour home buyer education class. This class is mandatory for programs like the Minnesota Housing Finance Agency (MHFA) Start Up loans, Dakota County First Time Home Buyer, City Living, and many other programs where you get assistance.  The class is also required to get reduced monthly mortgage insurance with the HomeReady conventional 3% down payment program

This class can be taken online, or in person at multiple locations across the state. There are different costs for each class ranging from as low as $25 to $75 per household. Only 1 borrower is required to attend.

Minnesota Only

The official required class is a NO PRESSURE, NO OBLIGATION class. No software, books, or anything else to buy. They will teach you about making good decisions in your future home buying experiences, and provide great information about the qualifying process, improving your credit score, and much more. There is no better way to learn about being a First Time Home Buyer in Minnesota than to attend AN APPROVED home buyer education class.

Upon completion of the class, you will received the required completion certificate that you need to give to your Loan Officer.


Why do mortgage lenders need your bank statements?

Why do mortgage lenders need your bank statements?

Minneapolis St Paul, MN: When taking out the largest loan most people will ever have in their life, a home loan, your Mortgage Loan Officer is going to ask a lot of questions, and request a lot of supporting documents, like pay stubs, W2’s, tax returns, and your recent bank statements.

Providing all this documentation really should be pretty easy for most people, yet it also causes a lot of frustration. Most people don’t get pay checks handed to them anymore, just as many people don’t get banks statements mailed to the home either. So here starts some of the annoyance issues right away for some people, while others quickly and easily access the documents online.

Your lender wants actual pay stubs, and actual bank statements, like what would be mailed to the home. Many people send simple screen shots, which simply doesn’t work. Most online accounts let you print real statements and real pay stubs, you just need to look around to find them.

Generally, most mortgage loan programs only require your two most recent bank statements. We also need ALL the statements pages too. If the statement says “Page 1 of 3”, and the last page is just advertising, we still need it.

Underwriters are also looking for lots of other things in your bank statements too, including:

Cash-to-Close

When the mortgage company looks at your bank statements, the most obvious thing they are looking for is do you have the money in the bank to cover your down payment and closing costs, also known as ‘cash-to-close.” Do you have it all today?  What is your average balances?

If your last two months bank statements show $500 balances, but you need $10,000 for down payment, where is it coming from?

Non-Payroll Deposits

Any large, obviously non-payroll deposit needs to be documented. What is it, where did it come from?  Is is a loan that needs to be paid back? Is it a gift? Is it your tax refund?

Large deposits is one of the biggest headaches for both the lender and the applicant, and depending on the answer, can be no big deal, require a little bit of paperwork to prove where it came from, or can actually be a deal killer.

A common problem is many people have large sums of cash at home, then deposit in the bank. As weird as it sound, that cash deposit is NOT an acceptable source of money for your down payment, and needs to be in the bank account at least 60-days before it can be considered usable money for your down payment.

So what is a large deposit?

Most lenders consider a large deposit any non-payroll deposit that is more than 50% of a applicant(s) monthly income for conventional loans, and more that 1% of the purchase price of the home for an FHA loan.

Bouncing Checks?

Yes, we care if you are bouncing checks. It shows how you manage money.

Let’s say your current rent is $1,000 a month, and you consistently bounce checks. Your potential new house payment is $1,400 a month. You can’t manage your account with rent at $1,000 a month, how are you going to be able to handle a $400 increase in your housing costs?

Undisclosed Debt

On the loan application, you are supposed to disclose all recurring debt. The reality is mortgage lenders generally just merge in the debt showing on your credit report. But a sharp eyed Underwriter may catch something on the bank statement and ask a question.

What DON”T we care about?

We don’t care about ATM withdrawals at the casino, and we don’t care about your purchase at the liquor store or Victoria’s Secret. We pretty much don’t care anything about your purchases.

Busy Bank Statements

Busy bank statements is my personal term for people who transfer around money from their various multiple accounts on a regular basis.  This can lead to a lot of headaches in documentation.  I just had a client, where on her bank statement, there was a large deposit. When I asked her where it came from, she said her savings account. Great, now send me the savings account statement.  Once I saw the savings account, there was a large deposit there too. She said that deposit was from a 401k loan.  OK, prove that too.

While she was able to prove and document everything, she also became very annoyed.  I understand, but those are the rules. So if you know you will be buying a home in the next few months, it may be easier to put all the money in one account now to avoid any potential issues with Underwriting.