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What you should know about financing and the VERY BEST RATES around!

I went to a meeting yesterday about what's going on the mortgage world and how to protect our clients, and ourselves. Here are a few of the things that I learned, in no particular order:

  • Make sure the purchase agreement includes language that protects the buyer, and their deposit, in the event that the loan does not fund for reasons outside the buyer's control (i.e. the lender going out of business) so that the buyer can get their full deposit back.
  • Make sure that the lender in the transaction is someone that you and your client know and trust -- whether you are the listing agent or the selling agent.
  • Give extra time for removal of contingencies, funding and closing. With lenders tightening up, they are scrutinizing everything more and you don't want to have to ask for an extension. Additionally, the lenders with the good pricing are getting very back logged.
  • Make sure you get not only a preapproval letter, but a rate lock commitment and a commitment letter from the lender, which shows that all conditions have been signed off by the underwriter, BEFORE you remove contingencies.
  • It's a good idea to have a back up plan (Lender B and Lender C) just in case Lender A cannot perform.
  • You might want to check on http://www.salary.com/ to see what they say the average person doing your job makes -- lenders are.
  • If some or all of your payment is going to be a gift, make sure it has been "seasoned" and in your account for at least 2 months.
  • To get the best rates, your FICO score should be 720 or higher--although some lenders are allowing 680.
  • Have your lender check your FICO score and do whatever you can to bring your score up so you can get the best rate possible. In some cases, this can take up to 6 months. So plan ahead.
  • Some lenders are looking for 25-30% down, and 6 - 12 months in reserves, if you are not doing a fully documented loan.
  • Be prepared to have your tax returns, W-2s, paystubs and the like available in the event the lender requires them.
  • Consider working with a reputable mortgage BROKER rather than a banker who only has access to proprietary products. BROKERS have access to many more programs and things are less likely to go South.

Below I have pasted in some information from a local lender, who I have found to have the very best rates:

Posted Wednesday Aug 15
(08/15/07 12:45PM) — Bob Mitchell - Realtor St. Louis

Excellent post!  I will point out that one of the advantages of working with a broker is that if a lender goes belly up, then they have a number of others to place the mortgage with!

 

Bob Mitchell

ValueList Real Estate Services, Inc. 

(08/15/07 12:47PM) — John Klassen

Salary dot Com is the bane of no-income and stated income loan officers. The deals need to make sense these days or they won't get done.

 

Good points.

(08/15/07 01:02PM) — Kelley Eling (Marin & So. Sonoma Real Estate)

Bob, you are correct, I will update my post to point people in the direction of a broker rather than a banker with only their proprietary products.

(08/15/07 01:05PM) — Esko Kiuru - Las Vegas NV Mortgage Consultant

Kelley,

These are excellent points in today's mortgage market environment. It's vital now to work with a seasoned mortgage professional who knows the potential pitfalls lurking out there. Lenders still have tons of good loan programs available for home purchases, so the money is there. The media unfortunately has painted a darker picture than what it really is.

(08/15/07 01:10PM) — Kelley Eling (Marin & So. Sonoma Real Estate)

Esko, unfortunately, the media almost always depicts a situation in a worse light than is factual.

(08/15/07 03:28PM) — Jeff Dowler ~ Carlsbad Real Estate

Kelley - this is great information for agents and buyers. Bookmarked for future reference. We need to continue letting potentail buyers know that while there have been changes and a tightening of lending practices, things are not as dire, from what I have heard from lenders, as the media would have us believe.

Jeff

(08/15/07 03:44PM) — Kelley Eling (Marin & So. Sonoma Real Estate)

Hey Jeff!

It's true.  Rates are GREAT and Mark Lachtman's rate sheet speaks for itself.  No tricks, point, gimmicks, just great rates.

Kelley

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