How does $0 application fees sound?

I don’t understand why mortgage brokers, like me, are so misunderstood. I am always getting feedback that borrowers stay away from us because they believe our fees are higher than going through their bank or online. Perhaps it’s all those mortgage television commercials, telemarketers or the banking giants that are giving us a bad image, but it’s time to set the record straight.  There is ZERO cost for you to use our services and we offer the BEST service.

Zero cost, you ask? That is a true statement as it’s the law. The new, amended “Truth in Lending Act “(Regulation Z which relates to loan originator fees) went into effect on April 1. The regulation was created to remove the ability for a lender to increase or set high-priced compensation for services. To accomplish this, consistent compensation is paid by our lending institution (typically a bank) for loans for all sizes.

In other words, regardless of your loan amount, our compensation comes from our lending source, and is based on a set percentage. You don’t pay us any money for putting together your loan and if you do pay an origination fee, that fee is used to reduce your interest rate only.

At the heart of this amendment, I believe, was the common practice among banks and some unscrupulous brokers to “steer” borrowers into loan programs or high interest rates in order to increase their compensation.  Consumers were often steered into loan programs that were not in their best financial interest. Moreover, banks didn’t and still don’t have to disclose fee-related information where brokers are required to disclose everything as it should be.

As mortgage brokers, we’ve long been under stricter scrutiny while banks don’t have to adhere to the same disclosures as us. This new rule makes the playing field more even, and it’s about time. We go the extra distance for you – even help with your credit score and help you prepare to purchase again after a Short Sale, foreclosure or bankruptcy. We do so much more at absolutely no cost to you.

How does that sound?

Have you heard of short payoff refinancing?

If you haven’t heard of short payoff refinancing, you’re not alone. Not all lenders offer it, so it’s not a program many homeowners are aware of. However, if you’re one who is feeling the financial pressure of high mortgage payments that exceed the value of your home, this refinancing program could be the discovery of the year for you.

Traditional refinancing provides a lower interest rate to your existing loan, which is based on the value of your home at the time of that loan. Home values today, as everyone knows, have plummeted, leaving homeowners paying more than their home is worth. Combined with our economic hardship, it’s also leaving homeowners struggling to stay in their homes.

Short payoff refinancing helps homeowners to stay in their home by negotiating a lower loan amount with the existing lender. Once agreed, that opens the door for a new, re-financed loan that pays off the reduced loan with your existing lender. The refinanced loan is through FHA with a 97.5% loan-to-value amount. The current home loan payments cannot be behind.

With the economy not improving as predicted and more homeowners facing foreclosure, the short payoff refinancing can be an appealing option for a bank or mortgage company. By agreeing to a reduced loan, they are not left with a larger short-sale debt or sizable foreclosure on their books. The short payoff refinancing helps lending institutions as well as homeowners, as it is far more advantageous than traditional refinancing. But only if it’s not too late and you haven’t fallen behind with payments.

Delta Home Loans is one of the few lenders offering this unique refinancing program. With this program, a good negotiator is critical in getting your existing lender to agree to a payoff at a lower amount. This is where our expertise and negotiating skills can be of utmost value to you. Don’t wait. Save your home, give us a call! (530) 478-8383.

Cash is king … especially when you can get to it

In today’s housing market, who wouldn’t pay cash for a new home if they could? Prices are affordable, there are plenty of homes to choose from, and, perhaps more importantly, you don’t have to go through the stringent lending process. Plus, investing in a home with growth potential can be more appealing than riskier options that are out there.

While it’s hard to believe in the midst of our tough economic times, many people are doing just that – paying hard-cold cash for a home. Whether it’s an investor with access and resources to money, first-time buyers getting help from family, or equity-rich homeowners realizing a windfall after selling, many of today’s homes sales are paid for with cash.

The downside to this in the past has been the requirements in applying for a cash-out loan, including a waiting period of six months after purchasing a home. You had to wait six months before you could even apply. Just recently, however, Fannie Mae suspended this requirement making it quick and easy to get up to 70% of what you paid for the home back out in cash to pay yourself back or invest again.

This is great news! Let’s say you recently made an all-cash purchase, and you decide you want to diversify your money in other investments, buy another great-priced home to become a landlord, or simply need the money for personal needs. If you didn’t finance any portion of your home purchase, you can apply for a conventional loan to get your money out. Plus, you can add on the processing costs to your loan (fees, points, and closing costs) which have been reduced since April 1, 2011.

The timing of this new cash-out program is an added bonus. There are reports coming out indicating signs of an economic recovery the second half of 2011. If that holds true, interest rates and home prices will start to go up as well as stocks and other investments. Now is the time for many to leverage their money to realize the best possible gain down the road. And to do that, it takes cash.

As lending brokers, we understand and appreciate the value of “cash is king.” We have a variety of programs and resources to help to you get your hands on it – quickly. The only wait is if you hesitate to pick up the phone.

Want to beat the housing market with low rates?

Are you one trying to beat the housing market with the lowest mortgage rate? In today’s economic climate of ever-changing mortgage rates, picking the optimum time to lock in the best rate is tricky. As a result, many buyers and those who want to refinance remain on the fence afraid to make a move because tomorrow’s rates might be better. In doing this, there’s also the possibility of the alternative – a missed opportunity because rates go up.

In an effort to seize the best rate, borrowers tend apply for a loan when they believe the rate is at its lowest and lock in that rate at the beginning of the process. In too many situations unfortunately, borrowers find that by the time all the loan requirements are met and unforeseen delays stall the closing, their locked rate has expired. They then have to settle for the new, often higher, rates which can be frustrating at its best.

For all the fence sitters out there in pursuit of low interest rates, Delta has a solution. It’s Best Execution. It’s a great solution because it allows you to strategically keep “sitting on the fence” without making a commitment on a rate until the very last minute. It is a bit different from locking in a rate at the time of initiating the loan application in that it combines closing your loan (yes, closing) with the lowest rate at that time.

The reason why Best Execution works is simple. It is a rate that is locked after all loan conditions and appraisal items have been satisfied. With the loan process more stringent these days, this is a real benefit that takes away the worry of trying to beat the rate lock clock. After loan conditions are met, the typical lock time is 12 to 15 days in which your loan must close and no additional information is required. This ensures that you have the most up to date and lowest possible rate at that time.

Additionally, Best Execution affords you the opportunity to buy down your locked rate to reduce it further. The closing costs (points/discounts) would be higher; however, if you plan to hold onto your mortgage for several years to recover the cost difference, the lower rate could be a valuable long-term payoff.

We’re seeing mortgage rates on a downward trend for the summer. In fact, it’s been a really long time since 4.5% for a conventional 30-year loan has been offered. With amazing low rates and the comfort of Best Execution, this is perhaps the worst time to be sitting on a fence.

Want to beat the housing market with the lowest rate? We’ve got the answers.  There are great lending programs to take advantage of. What are you waiting for?

USDA Rural Loan a Best-Kept Secret

This isn’t my first blog about the U.S. Department of Agriculture Single-Family Housing Guaranteed Loan Program that is offered here in Nevada and Placer Counties. Nor is it my first blog about big-name banks withholding information and their limitations when it comes to financing options for those seeking a mortgage or re-financing.  However, the two topics have intersected once again, so I’m compelled to recycle my message regarding the realities and differences between a banker and a broker.

Unlike banks that are limited to their specific funding, I have a variety of loan options to offer my clients, including all the great government programs geared toward affordability. One of the best-kept secrets is the USDA’s program which guarantees loans for single-family homes in designated rural areas. Aimed at low- and moderate-income borrowers with 100% financing, low fixed interest rates and no Mortgage Insurance, it has opened many homebuying opportunities for residents in our community.

Recently during the final process of closing on a USDA loan, my client expressed his good fortune at learning about the program through Delta. It turns out that, simultaneously, a friend and co-worker of his went to a big-name bank for a mortgage, but was never told about the program. He was never advised of how to repair his credit score to get a lower interest rate or how to eliminate Mortgage Insurance.

Furthermore, my client’s friend was required to come up with a 3.5% down payment. Like many buyers, he got locked into the bank’s high-cost, no-way-out loan that only benefits the bank’s already lucrative bottom line. By the time his friend learned of the 100% financing through USDA, he was too far into process and too worried about the fallout to move his mortgage.

We hear of this happening far too often. There are many differences between big banks and brokers worth re-blogging. Bankers are not always trained loan officers. Their responsibilities include opening CDs and checking accounts along with working on car loans and mortgages.

Particularly important to emphasize is that banks are not required to disclose some information to consumers including available local programs or yield-spread premiums (rebates for banks = higher rates for you). As brokers, we are required to disclose absolutely everything to you, which I believe is simply good ethics and business practice.

The USDA rural loan program is just one of the many excellent, federally funded programs being offered these days. Just give us a call. We love talking about best-kept secrets.  We’d also like to hear about your experiences with a big-name bank. Leave us your comment.

Fannie Mae and Freddie Mac’s HARP offers hope

Every day, most of us look to find hope in the recession’s recovery. Home values continue to dwindle along with jobs, while the federal government creates and implements new programs to stabilize the economy and the housing market. For many in fear of losing their home, government programs can offer the hope they need for survival.

The Home Affordable Refinancing Program (HARP) is one. It’s a key part of the Making Home Affordable relief efforts to help distressed homeowners avoid foreclosure.  HARP was introduced over a year ago and was set to expire this June. With the economy still struggling and more homeowners needing to save their home, HARP has been extended for another year, until June 2012.

As a mortgage lender, I think this was a great decision. HARP has a number of advantages, particularly in that it’s a more stable and affordable mortgage, allowing rate and term refinances up to 125% of the current appraised value of the home. The program also allows a current second deed of trust to remain in place with the acceptance of the second deed of trust note holder.

A few of the program’s highlights include:

• Current mortgages have to be owned by Fannie Mae or Freddie Mac.
• There is no minimum credit score required.
• Your lower property value doesn’t hurt you.
• There will be no mortgage insurance (MI) with negative home equity.
• You will probably have lower surcharges. In other words, you won’t be paying high costs for a new loan because of lower credit score or high loan-to-value ratio.
• You can have taken your home off the market one day prior to applying for the loan.

For those who have been unable to obtain traditional refinancing, HARP offers hope, and Delta can help turn your need for affordable homeownership into a beautiful reality. Just give us a call and let’s work together to see if this program works for you.  You can check if your mortgage is held by Fannie Mae or Freddie Mac with these links:

http://www.fanniemae.com/loanlookup/

https://ww3.freddiemac.com/corporate/

 

Surprise – two big banks drop reverse mortgages

In early February, Bank of America made a surprise announcement that they would shut down their entire reverse mortgage business. That service, while down, was still profitable for B of A. On March 1, Wells Fargo announced they would exit the wholesale reverse mortgage business. That’s two major banks dropping this service within 30 days.

Delta Home Loans has its own announcement to make. We will continue to offer reverse mortgages.

In our community, where the majority of our residents are seniors, a reverse mortgage has tremendous advantages, particularly these days with higher food and medical costs, insufficient Social Security benefits, dwindling savings and economic hardships affecting family members. Unlike many conventional loans today, the qualifications for a reverse mortgage are relatively easy.

A reverse mortgage, also known as a loan conversion, is a loan made available to seniors aged 62 or older, and is used to release the equity in a primary residence as one lump sum or multiple payments. The loan is deferred until the home is sold. The owner doesn’t need income and there aren’t any monthly payments. FICO scores, credit history and income are irrelevant and can work to pull someone out of a foreclosure.

A reverse mortgage can be used for just about everything. It offers financial freedom that many seniors need to help with every day expenses, to live more independently or to simply enjoy the golden years.

With our low loan costs and no upfront mortgage insurance costs, we can help our local senior homeowner’s with a really sweet deal without any surprises. Delta is just another beautiful reason why local services, not big corporate banks, know how to best take care our community and one another.

Just give us a call and ask.

 

What’s up with FHA?

Is the Federal Housing Administration following the footsteps of rising fuel prices? In April, the FHA will raise its mortgage insurance (MI) fee by .25 percent. This will add an average cost of $360 a year for new borrowers who are already on tight budgets but want to take advantage of the unique housing market. With costs going up everywhere these days while incomes remain flat, consumers are asking, “what’s up?”

It’s good to be questioning these confusing actions. In the case of the FHA loan program, which is really an insurance plan, the agency needs to get their reserve account up to required levels. While this is a simplified explanation, seeking understanding can flush out the attractive lending alternatives out there that will afford borrowers the home that they want.

There are two great programs worth looking at, particularly for California residents. Fannie Mae is a government-sponsored agency that works with mortgage brokers, including Delta, to ensure that there are funds available to borrowers at affordable rates. Depending on the purchase property, their HomePath program features a low 3% down, flexible mortgage terms, no appraisal and no mortgage insurance. HomePath can be available for primary residences, second residences, and investment properties.

For Nevada County home buyers, the USDA has opened the buying possibilities to so many with its ultra-sweet rural lending program. It features 100% financing (yes, that means zero down!), financed closing costs, fixed interest rates, seller contribution of up to 6%, and no mortgage insurance.  Moreover, the program is available for purchase or re-finance, and is not exclusively for agricultural workers.

In addition to current affordable loan programs, there are others that will be available in the near future along with more stable home prices. The silver lining is out there. All you have to do is ask us what’s up with all the lending options. We’ll tell you everything you want to know – and more.

Let’s start talking.

Mum’s the word at banks

In my May 2010 blog “Broker versus banker,” I discussed distinctions between the lending services of brokers, including Delta Home Loans, and those of banking institutions. A few good-to-knows included bank’s limited loan options, limited money resources, and their inability to fix problems such as credit scores. This blog adds another distinction – “what the banks won’t tell you.”

Let’s face it. Under their corporate, bureaucratic structure that’s suffered sweeping financial blows, banks have a bottom line to meet. Their bottom line. Banks are not required to disclose yield-spread premium which are rebates given to the lender for a higher interest rate to the borrower. In some situations, particularly with refinances, this higher interest rate can be a benefit to the borrower; however, wouldn’t you want to know what the charges are?

More than disclosure being a requirement for brokers, I advocate this as good business practice. It offers more transparency between us and the borrower, and it is an important step in building trust and a rewarding relationship. With a bank loan, you won’t know if you’re being charged fairly.

Banks also don’t need to tell you what outside loan programs you might be able to take advantage of. Have you heard of the USDA rural loan program or the exciting, new California downpayment assistance program for first-time homebuyers? Your bank officer will only present their loans with ultra-conservative guidelines that only a few buyers can meet these days.

Bankers are, however, forthright in letting you know of their “bankers’ hours.” That means they’re not available after hours and they’re not available on weekends. Moreover, it’s not uncommon for borrowers to get a different person when calling the bank, and are even referred to a corporate 800 number.

We are more readily available in person or by phone as part of our personalized approach in helping you achieve your real estate goals. In fact, we go with our borrowers to the final signing of documents. Going the extra distance at the end provides comfort that the paperwork is exactly how we discussed and there are no last minute surprises.

Mortgage brokers simply add more value to borrowers, especially during these challenging economic times. If you want to know how, just ask us. We’ll tell you everything you want to know.

Leave us your comment, and let’s start talking.

Best news of the year!

This past year, it was sure hard keeping up with all the new government programs that were created to help the economy and the housing industry. It kept those of us in then lending industry on our toes without much success in stimulating home sales. However, the best news, and perhaps most promising new program, came in the 4^th quarter of this year. It was the California Homebuyer’s Downpayment Assistance Program (CHDAP) for first-time buyers.

Particularly noteworthy is the definition of a first-time homebuyer. It is one who has not owned a home and claimed mortgage interest deductions in the past three consecutive years. That means if you have owned and sold a home in the prior three years, you could qualify as a first-time buyer and be eligible for this new program. This alone opens the window of opportunity for so many more people.

Here are some other key highlights:

• It provides financing up to 99.5% of the sales price, below market interest rates and affordable down payments.

• CHDAP is a fixed-rate junior loan that goes along with a first mortgage loan.  Payments are deferred for the life of the first loan, or if the home gets re-financed or sold.

• It provides up to 3% of the sales price or appraised price, whichever is less towards the down payment or closing costs.

• The borrower contributes only 1% of the sales price.

The CHDAP program is in partnership with the Federal Housing Administration (FHA), and is offered through the California Housing Finance Agency, which was established to provide affordable housing opportunities for low- and moderate-income Californians. While home values and income restrictions apply, this is overall very good news for those who want to take advantage of the buyer’s market and enjoy the benefits of homeownership.

A mortgage professional, including Delta Home Loans, has all the detail and information you need to know. So let’s start talking. We love to share good news!