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.


Minnesota Mortgage Loan Limits for 2018

Minneapolis, MN: Once a year, maximum mortgage loan limits are potentially reset for popular loan programs, including standard conforming loans (Fannie Mae, Freddie Mac), FHA loans, VA loans, etc.

Minnesota, Wisconsin, and South Dakota (the states that I lend in) all have the same maximum conforming loan limit for 2018 of $453,100 for a single family home (higher for multi-unit properties). You can but a more expensive home, but to qualify for these programs, your LOAN AMOUNT must be under this number.

2018 MN, WI, SD Conforming Loan Limits

Loans over this amount are known as jumbo mortgage loan. There is no Fannie Mae or Freddie Mac for jumbo loans, so there are significantly different rules and guidelines for jumbo financing.

VA loans in Minnesota are zero down payment loans up to the same conforming limit of $453,100.  You can but a home with a VA loan over $453,100 – but now you’ll need to have a down payment. Read this information on VA jumbo loan down payments, or I can help you determine your down payment requirements on VA jumbo loans, just contact me at (651) 552-3681.

FHA Loans and USDA loans have different loan amount limits depending on what county you intend to buy the property.  Click here to check current FHA loan limits, and click here to check current USDA loan limits.

A single family home in the Minneapolis / St Paul metro area counties is $356,500 for 2018, but in Stearns county for example, it is only $294,515. Another example would be Dane County Wisconsin, at $299,000. As with conventional loans, all counties have higher limits for duplex, tri-plex, and 4-unit homes.

USDA rural housing loans do not have a house price limit.  Rather, they have an income limit. Click here to review the USDA income limits.

 


The DANGER of automated mortgage pre-approvals via your cell phone

The danger of automated mortgage pre-approvals via your cell phone

Minneapolis / St Paul, MN: Can you really get a mortgage pre-approval online in 10 minutes? Yes. Should you? Probably not. It’s 2018 as I write this, advancements to our lives, along with instant gratification is everywhere. Why go to the store when you get better selection and two day shipping from Amazon. No need for old fashion video stores, everything is on Netflix, Amazon Prime video, or your HBO Go app.  Twitter, Facebook, the internet, and of course Smartphones and iPads have replaced home computers for many people.

So it is no surprise that many mortgage lenders are now advertising instant 10-minute mortgage loan pre-approvals while you stand in front of the house you just looked at. The biggest company pushing these is Quicken Loans ® “Rocket Mortgage”®.

Sounds cool, and their commercials are really funny… But wait a minute… This is the largest financial transaction of your adult life. Can it really be done on your cell phone?

 The Traditional Mortgage Loan Process

The traditional process is you complete a loan application. You do that in person, over the phone, or by completing an online loan application. From there, a real live person reviews the information, pulls your credit report, talks to you about your situation, uses knowledge and expertise to explore all avenues, issues, and different loan options (all good ideas).

Assuming that all looks fine, your application is processed through one of the major AUS (automated underwriting system) of Fannie Mae, Freddie Mac, FHA, etc, to get your initial “looks good” answer.

ffThis automated underwriting system process only takes a few seconds, and with the initial “looks good” answer to your loan application, you got a loan, right? NO, not even close.  This is just AN INITIAL step.

Next, just because the AUS indicates ACCEPT (yes), there are still pages of information and requested items that need to be received and reviewed for accuracy BY ALL LENDERS. Common items are W2’s, pay stubs, bank statements, tax returns. Depending on your situation, you may need further items, like bankruptcy papers, divorce decrees, and more.

You generally need to gather all those documents and submit them to your lender for review to receive a proper Pre-Approval.

PRE-APPROVAL IS NOT A LOAN GUARANTEE

After you find the exact house and sign a purchase agreement, the lender orders the appraisal, title review, and everything else is sent to the underwriter for final review. Generally speaking, a proper professional pre-approval will equal a successful final approval by underwriting in the final stage of the process. A sloppy pre-approval, not properly review??? Scary stuff.

Your largest financial transaction of your life is too important to trust to just anyone, let alone a computer. You need the wisdom and input from a licensed, experienced, and professional Loan Officer.

The Quicken Rocket Mortgage ® 

The difference with their app, is that after taking the initial application information online (like thousands of other lenders), their app jumps right to running your information through the major automated underwriting system to get that initial pre-approval. Yes, that can take just 10 minutes.

Next, they attempt to gather some of your basic supporting documents electronically. Rocket Mortgage ® will ask you to link your financial accounts to their program. This allows them to check your financial statements online without you having to send them the physical copies of your banking information. Again, sounds cool, but in the day of cyber hacking, do you really want to give them access to your information electronically?

Next, a huge portion of applicants are not able to take advantage of instant document verification, and still need to submit many, if not all of their documents the traditional way – completely eliminating the cool factor.

You can also get instant rate quotes, cost quotes, and options like to buy discount points. Again, sound nifty, but…

The first major issue is simple. Garbage in equals garbage out.

I review a LOT of online mortgage applications.  Rare is it that I don’t need to change or adjust any application data before running it though the computers. Data errors, missing data, and income that isn’t allowed to be used for qualifying are all too common.

For example, I recently had a client input $50,000 a year for his wife at a job she has been at for about 9 months. But, as I interviewed him, I discovered that her new job is 100% commission based. Standard underwriting rules for commission based income require the person to have two-years on the job, and that we average the two-years of income.  Therefore her job qualifying income was ZERO.  Oops… Now you are running around with a quick pre-approval looking at houses you will never actually get final approval to buy.

Another recent applicant answer the “Do you pay alimony or child support” question online NO. But when I physically reviewed his pay stub, it clearly showed the deduction for child support. This additional debt lowered the maximum house he could buy $50,000. Again, potentially someone running around with an invalid pre-approval letter.

 The Big Disadvantage of Instant Online Approvals

For as cool as all this sounds, it has huge disadvantages.

First is not having the opportunity to talk to a human loan officer. Consumers may lose out by applying for a mortgage that isn’t necessarily the best choice for their situation. I get clients all the time who complete my online application for one loan type, but I end up switching them to something better suited for their situation. This is because most applicants usually have several mortgage options available to them. Since most consumers are not mortgage experts, this is clearly an area where a human loan officer could help steer their client in the right direction.

Your largest financial transaction of your life is too important to trust to just anyone, let alone a computer. You need the wisdom and input from a licensed, experienced, and professional Loan Officer.

They typically don’t offer first time home buyer programs, and don’t offer down payment assistance programs. This is especially troublesome, as younger first time home buyers are the ones more inclined to think apply on your phone is cool.

Do they have the best interest rates and lowest closing costs?  Generally not, and sometimes, especially on government loans, like FHA, we beat their rates by a long shot.

The Best Move When Getting Mortgage Pre-Approved?

When buying a home, your best move is to always work with a local lender the traditional way. The guy located in your geographic area, with a local reputation to protect. There is nothing anyone on the internet on the other side of the country can offer that you can’t get down the street.  More often than not, it is just the opposite… Especially when it comes to down payment assistance programs for first time buyers. These programs are always only available from the local lender.

We lend for homes in MN, WI, and SD and would love to assist you

Click to apply online


Current and Historic Mortgage Interest Rates

 

What are current and historic mortgage interest rates?

I get asked on a regular basis about where are mortgage interest rates at today, where were they last week or last year… and the best one, what do I think they will do tomorrow.

Of course I have no crystal ball for future rates, but there are many different indicators we look at that gives us a good idea where they may be going. As you can imagine, there are many things that can throw a monkey wrench into the estimates and predictions.

From all time highs, to historic lows – I thought it would be fun to take a look back at mortgage rates:

Historic mortgage interest rates

Mortgage interest rates 2017

Click here for current Mortgage Interest Rates

 


Is Credit Karma your real credit score?

Many people get their credit score from places like Credit Karma, and off their credit card statements. But are these your real credit scores?

The answer is YES and NO. Yes, they are a real credit score, but you may get a very different score when your credit is reviewed by lenders.

The confusing comes because there are many DIFFERENT scoring models out there, including multiple different ones from the same credit bureau. Each company and scoring model calculates your score a bit differently, but they all use information from your report.

The three main credit bureaus – Equifax, Experian and TransUnion – create your credit reports, with credit scoring models like VantageScore, Beacon Score, and various FICO scores. These are use to come up with a score that typically ranges from 300-850. Theses scores for you based on their own proprietary models.

VantageScore 3.0 is a credit scoring model generally used whenever you the consumer are able to look at your own credit score, while most lenders actually use different scoring models.

Basically the thing to understand is something known as Industry-Specific Credit Scoring models, which are tailored to each industry. If you buying a new car, or new home – it may make sense for that lender to consult a credit scoring model created with for what they care most about. So car lenders care about how you handle car loans, credit card companies care how you handle credit cards, and finally, mortgage lenders car most about how you handle mortgage loans. When you look at the Vantage score, I generally call that the generic score because it is not tied to any specific industry.

For example, FICO® has all of these different models: FICO® Score 9, FICO® Auto Score 9, FICO® Bankcard Score 9, FICO CLASSIC V5, FICO CLASSIC (04),  Fair ISAAC (VER. 2).

So your score WILL VARY based on where you get it, and what type of company pulls it. It is most common for us to see your mortgage score easily 20 points lower than your Vantage score.

Your credit scores are typically based on things like how often you make payments on time and how many accounts you have in good standing.

Your score will never factor in personal information like your race, gender, religion, marital status or national origin.


NO documentation MORTGAGE loans AVAILABLE? No. Alternative? Yes

Minneapolis, MN: Not everyone meets the traditional proof of income guidelines for your standard home mortgage loan. For years, the industry offered all sorts of alternative options, from no documentation stated income loans, where you just told us what you made, but didn’t prove anything, to true No Income, No Assets, no anything loans. Just a good credit score and a large down payment.

These programs served a small niche market, and had been successful for many years.  In the real estate boom years from 2000 to 2007, these long held niche programs became highly abused – resulting in law changes that all but essentially made them illegal to offer.

No documentation loans

Current rules require lenders to prove and document sufficient income to safely afford your loan payment. All your traditional loans deem that to be pay stubs, W2’s, and tax returns.

These rules leave many people out in the cold – especially the self-employed.

What No Income Documentation Loans Are Available Today?

Well, none… But there is one big non-traditional offering in the market, this being bank statement loans. With these programs, in lieu of traditional pay stubs, and tax returns, lenders use the deposits on your bank statements as qualifying income.

Common options include:

  • qualifying on just 12 months or bank statements, but you get better interest rates if you can prove 24-months of statements.
  • Using 100% of your personal bank statement deposits as income, or 50% of business bank statement deposits

Bank Statement Loans

The Down Side

First, there is no standard set of rules for these programs, so the there is plenty of variation between lenders. A good example is that some lenders only offer 24-month programs, or won’t do it at all with lower credit scores.

Expect at least a 10% down payment requirement, but most will require 20% to 25% down payment.

Expect closing costs to run higher than traditional loans.

Finally, as you might imagine, these programs don’t offer the best current mortgage rates. Typically we see these programs run with at least a 2% higher interest rate than traditional mortgage loans.

The Bottom Line

You should always try to be approved for traditional financing. But if your situation doesn’t allow for that, while no a full no documentation loan, at least there is an option to income qualify for a home loan with your bank statements.

Apply for a Bank Statement Loan

We here at Mortgages Unlimited offer a variety of bank statement loan options for properties located in MN, WI, and SD. Call us at (651) 552-3681 to discuss your situation – or better yet, complete the simple ONLINE LOAN APPLICATION right here on this web site.

Click to apply online

The small print: Not an offer to enter into an interest rate lock agreement per MN law. Not everyone will qualify. Equal housing lender. NMLS 274132.


Tips for MN First Time Home Buyers

Minnesota First-Time Home Buyer Tips

Minneapolis, MN: Being a first time home buyer, and buying your first home is an exciting time. There is no reason to be worried, and here are a few tips to help guide the way.

STEP 1:

Find a lender – Get Pre Approved for a Mortgage Loan.

Unless you are paying cash, you are going to need a loan. Finding and choosing the best loan and lender to handle the loan for you should not be taken lightly. Randomly taking to whoever answers the phone at  1-800 Big Bank, or thinking you can get a mortgage in 10 minutes via your cell phone are generally huge mistakes.

Read my whole separate article on Shopping For a Lender

Once you find your Loan Officer, they will review various programs with you, go over your maximum purchase price, payment comfort level, and any other requirements.  Expect to send in a minimum of your Photo ID, last 30-days of paystubs, last two-months bank statements, last two-years W2’s, and at least your last filed Federal tax return.

With a mortgage pre-approval in hand, you can meet with the Real Estate Agent, and know exactly how much house you can afford to buy, so you are not wasting time looking at homes outside of your price range.

Step 2:

Find a Realtor.

As with picking a Loan Officer, picking a Real Estate Agent also should not be taken lightly. As a Loan Officer, my tips for selecting an agent are:

  1. Avoid big real estate ‘teams’ – you never work with the big guy.
  2. Most major real estate company charge extra fees – Pick small independents
  3. Experience matters, A LOT.

Once you’ve selected your agent, they assist you in finding your dream house, negotiating a great offer, walking you through the paperwork, and helping with things like inspections.

TIP:  Did you know that the buyers do not pay anything out-of-pocket for the working with an agent to buy a home. The cost of your agent is paid for by the seller.

 

Make a Home Wants and Needs Wish List.

Make a list of what you absolutely must have in your new home. Number of bedrooms, school district, etc., and let your Real Estate Agent know.  Then also decide on things you can be flexible on. Unless you are building a custom home, no house will be a perfect fit.

Looking At Homes.

Typically your agent will set you up on automated email listing of new homes that fit your criteria.  Especially in the under $300,000 price point, you should look at those emails daily, and if you see something you like, you need to be prepared to drop everything, and go immediately look at the house.  Waiting for the weekend or a day off, and you may have been just beaten out by someone else.

As you look at homes, you may find your wants/needs list can change.  Be sure to pass that along to your agent.

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.

 


The closing costs are 3% myth debunked

I just heard it again, a Real Estate Agent saying average closing costs to obtain a home mortgage loan in Minnesota are about 3%.

This simply is way too broad a statement about actual closing costs.

As an actual Minnesota mortgage lender for the past 26-Years, the perception that mortgage loan closing cost are about 3% in MN has never been really accurate. This gets spread around primarily because a conventional loan only allows for seller paid closing costs of 3% ( FHA Loan is 6%: VA Loan is 4%, convention is 6% with a large down payment ).

About 1/2 of closing costs are a set cost regardless of purchase price. The other 1/2 of closing costs are based on the purchase price. Take an appraisal for example, a $500 dollars appraisal cost is about 1% of a $50,000 Loan, but only .1% of a $500,000 Loan. Another example is the title company closing fee, which is now around $400. Again, regardless of purchase price., but can make a big difference in the overall cost percentage.

So lower priced homes tend to have costs of 4% to 5% of the price, while upper end homes tend to come in closer to 2% of the price.  Therefore getting 3% seller paid costs falls short of the real costs for many buyers.  These examples assume full closing costs and pre-paid items (taxes and insurance).

To make up the difference, lender can, and commonly offer you other options, like a no loan origination cost lan, or even total no closing costs loans. We also can do something called ‘lender credits’ to reduce out of pocket closing costs. While these options sound great, they are all achieved by increasing the interest rate. Therefore you pay costs over time, versus up-front today.

That is the same when asking for seller paid closing costs. You are paying over time, versus out of pocket today.

Finally, there is absolutely nothing wrong with any of these options. They just need to be understood and analyzed to see what is best for you.  A good Loan Officer will explain and go over all these items once we see a full application, and understand your financial position, amount of cash you have to pay for down payment and more.

Property understanding all these items, then working together with a great agent to property structure your offer will make sure you get a great overall deal on your dream house.

Be sure to ask your Loan Officer plenty of questions, and be sure you carefully pick the Loan Officer who will be handling your largest financial transaction of the average persons life.

If you are buying a home in Minnesota, Wisconsin, or South Dakota… I can be your Loan Officer.  Contact me at (651) 552-3681 or JoeMetzler.com.

 


Buy a MN or WI Home with $1,000 Down and Down Payment Assistance

Buy a MN or WI home with as little as $1,000 down? Yes, it is possible.

Minneapolis, MN:  One of the biggest true hurdles to home ownership is a lack of down payment money. Sadly, many people don’t even apply for a home loan, because they think you need a much bigger down payment than you actually may.

You may qualify for down payment assistance. Apply to find out.
You may qualify for down payment assistance. Apply to find out.

But, if you have at least $1,000 of your own money, OK or better credit (640 score or higher), you may be able to buy your own home using our first time home buyer programs with down payment assistance.

Other low down payment options include:

  1. 3% down payment conventional loans (HomeReady and Home Possible)
  2. 3.50% down payment FHA loans
  3. No down payment VA loans
  4. No down payment USDA Rural development loans.

If you are in MN, WI, SD, or FL – Simply complete the secure online application at www.FirstTimeHomeBuyer-MN.com in about 10 minutes time. A fully licensed and experienced Loan Officer will review your loan application, then go over the various program to see what programs you qualify for, how much house you can buy, what the payments might look like, and finally, how much cash you may, or may not need to put it all together.

If you are in other states, simply find a LOCAL mortgage broker, and apply with them.

You have nothing to lose in applying, and everything to gain in owning your own home!

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Joe Metzler is a Senior Mortgage Loan Officer for Minnesota based Mortgages Unlimited. He was named the 2014 Minnesota Loan Officer of the Year, and Top 300 Loan Officers in the Nation for 2010, 2015, 2016.

To finance with a home with Joe and Mortgages Unlimited, your local preferred lender for Minnesota, Wisconsin, and South Dakota, simply call (651) 552-3681 or APPLY ONLINE. NMLS 274132. Equal Housing Lender. Not everyone will qualify. See web site for more details. Not an offer to enter into an interest rate lock agreement.


Better credit score tips

CREDIT SCORE TIPS

Are you making this credit score mistake?

Many people believe that running up credit card balances, then making on time payments or paying it in full each month will build higher credit scores.  This is a MYTH!

You don’t need to carry a balance or use your card in order to build credit.

This pervasive myth usually gets said around a dinner table or past among friends, and of course is all over the internet – but is a terrible piece of advice — especially if you have bad credit to begin with.

Credit score factors

Carrying a balance says you have credit, need the credit, and are unable to pay off the balance. This is considered poor utilization of credit, and results in bad credit and lower credit scores.

Carrying very little balance, or better yet, no balance, says you have credit available, hardly ever use it, and can pay if off quickly – Which are all GOOD traits and result in good credit and better scores.

You should never carry a balance if at all possible, pay down as much as possible each month if you must carry a balance – and never ever have a late payment under any circumstances to have rock’in credit scores.

When the time comes to buy a home, you want the highest credit scores possible to get access to the most programs and the best interest rates.

Contact our Mortgage Experts at (651) 552-3681 of apply online at www.MortgagesUnlimited.biz


Relaxed student loan guidelines makes qualifying easier

Student Loans and Mortgage Approval. What are the guidelines?

Minneapolis, MN: Student loan debt is at an all time high, and has been noted as a contributing factor to why may people have been unable to purchase a home, especially first time home buyers.

Recent changes to Fannie Mae and Freddie Mac guidelines have made it easier for some, but not all with student loan debt to still qualify for home mortgage loans.

Fannie Mae and Freddie Mac do not do home loans. Rather they buy loans from lenders after that fact. Both Fannie and Freddie have set underwriting guidelines that if lenders follow, makes the selling of loans to Fannie Mae and Freddie Mac much easier.  While the number moves, at any given time, Fannie Mae and Freddie Mac control +/- about 60% of all home loans.

Student Loans. How do lenders calculate?

Student loans can be in active repayment, some sort of reduced repayment (which is typically an income based repayment), or completely deferred.  While a student loan may be deferred for the next year or two, your mortgage loan is typically a 30-year loan. It only makes sense that lenders take current or future student loan payments into consideration when calculating debt ratios and affordability.
To avoid confusion, I’ll just talk about current guidelines for how lenders currently deal with your student loan debt for debt-to-income ratio purposes.
These guidelines are current as of this article (Dec 1, 2017 (updated)

FHA Loans:

FHA loans must use the greater of 1% of the outstanding balance, or the payment listed on the credit report, unless you can document the payment is a fully amortizing payment. No income based repayment, graduated payments, or interest only payments allow

Fannie Mae Loans:

For deferred loans, must use 1% of the outstanding balance. For loans currently in repayment, use the payment listed on the credit report. If payment is listed as $0.00, but $0.00 is an active income based repayment, we must verify with the student loan company that $0.00 is the income based repayment.

Freddie Mac Loans:

For loans in repayment, use the amount listed on the credit report, or at least .50% (1/2%) of the outstanding balance, whichever is greater.
For deferred loans, must use the amount listed on the credit report, or 1% of the outstanding balance as reported on the credit report.

USDA Rural Housing Loans:

For USDA loans, if the loan is deferred, income based payment, graduated payment, or interest only payment, must use the greater of 1% of the outstanding balance, or the amount listed on the credit report.

VA Home Loans:

For VA loans, if payment is deferred at least 12 months past the loan closing date, no payment need be listed.
If payment will begin within 12 months of closing, use the payment calculated based on:
  a) 5% of the outstanding balance divided by 12
  b) The payment listed on the credit report if the payment is higher than calculated under (a).
  or
If payment on credit report is less than (a), a letter, dated within the last 60-days directly from the student loan company that reflects the actual loan terms and payment information is required to use the smaller payment.

More people with student loans now qualify

These updated guidelines primarily help those currently in repayment, but with income based, graduated payment, and interest only payment student loans obtain conventional loans.
 Regardless of your student loan status, I always suggest that people never assume you can’t buy a home.  Always talk with a professional licensed Mortgage Loan Officer to get the facts regarding any financing options.  I offer all this loan option and more for properties in Minnesota, Wisconsin, and South Dakota and can be reached at (651) 552-3681, or www.MortgagesUnlimited.biz


Equifax, Credit Freeze, and Getting a Mortgage Loan

With the latest hack of personal information from one of the big three credit bureaus, the topic of freezing your credit report to prevent identity theft is back in the news.

Having a credit freeze on while getting a mortgage loan can cause huge headaches.

A credit report freeze, does exactly as the name implies.  It freezes your credit report so that no one can access or view the file until you unfreeze, or temporarily lift the freeze on your credit report. A credit report freeze prevents many types of fraud, especially the opening of new accounts in your name, but DOES NOT prevent the most common fraud, which is stolen credit card numbers.

Personally, I think credit freezes are awesome. The credit bureau’s make them more difficult than realistically needed to both freeze and unfreeze your account, taking up to three days to lift a freeze, and charging money for the service. That is why is hasn’t caught on with the basic public.

Why do they make it hard to freeze / unfreeze?

Simple. Follow the money.

Discover Card has for some time, and other credit cards are catching on with apps for smartphones, where their clients can instantly turn on and off their credit card, effectively preventing anyone from charging on the card.  The credit bureaus could do the same for your entire credit report, but choose not to.

The main reason is money.  For example, all those pre-approved offers you get in the mail? The creditor paid for those reports. If everyone has a frozen credit score, this limits the credit bureaus income and ability to sell those pre-approved reports.

Mortgage Loans and Credit Freezes.

When applying for new credit, and in this case, specifically a mortgage loan, your lender will see nothing, and get no scores if your account is frozen. Of course you will need to lift the freeze, as your mortgage lender will need to review your full credit report.

Where the problem come in for mortgage lending, is your lender actually needs to potentially have access to your credit report during the entire loan process, not just the first day when your Loan Officer pulls your initial credit report.

In order to be able to provide them a mortgage loan they must unfreeze their credit, ideally until closing. If they do not want to leave the freeze off that long, they will need to unfreeze it any time we need anything related to credit; first pull, re-scores, supplement reports, re-issue reports, and finally a credit report lenders look at just prior to closing to see if you’ve applied for any new credit.

The last report, known as an LQI report, is especially problematic. Your mortgage lender will pull this report generally within about the last five days prior to closing. If your report is frozen, we have to stop and call you to get it lifted.  It may take up to three days to unfreeze your report, potentially delaying your closing.

Therefore, mortgage lenders will ask all clients, if they have a freeze on their credit prior, to unfreeze their credit report until the day of the home loan closing.