Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans

Mortgage Interest Rates - When people shop for mortgages, one of the first things they want is to know the interest rate. Not only that, they want the best and lowest rate. When your average loan officer hears this, they usually don't want to lose you as a client, so they might low ball the rate a little. It doesn't matter if they put this quote on the good faith estimate. It's just an estimate on a piece of paper that until you have a property and have locked into this rate, some loan officers won't honor this estimate. And in order to secure this rate, you should have been given an interest rate lock-in agreement.

Overall, what you think might be the best, might not be the best. Shopping and comparing is not always easy and needs to be done on the same day. What I want to talk about is your mortgage payment and what you should be thinking about.

It can be a balancing act when you are trying to get the lowest interest rate when your main focus should be what type of mortgage payment that you would be comfortable with. One of the first questions that I ask is what kind of mortgage payment you would be comfortable with, or at least a range. I have been criticized by a few loan officers in the past for mentioning this and they had their own reasons. But believe it or not, about 95% of the buyers that I speak to, already have a quick idea. This shows that they have been pro-active in their thinking and not trying to buy the most house that they can afford.

A quick lesson in mortgage interest rates. Sure, the lower the rate, the lower your mortgage payment. But should it really matter if you tell me that you are comfortable with a $2,500 mortgage payment and I tell you that your interest rate is 15%? Sure, it would mean that you could only buy x,y,z house. But your main focus was on the payment that you are comfortable with.

In my opinion, interest rates can play a mind game in several ways.

Many people in our industry have been told to rate. Too many people get hung up on trying to get the lower rate. Sometimes in your mind, a lower rate means that you can afford that payment. When in reality, you should start with what payment you can afford.

Another issue is that some consumers try to out do their neighbors and friends. It becomes bragging rights, in regards to who got the best deal. Unless you both pull out your credit reports, you HUD-1 settlement sheet (to see how much you paid), and bought the exact same house; this still won't tell you who got the best deal.

Lastly, each consumer is different. There is not one person out there that will ever have the exact same scenario as the next. And 2 months down the road, who can say that the rates would be the same or that they are the same.

ADVICE : Trust the professional that you decide to go with. Always ask questions and if you don't understand something, don't hesitate to ask. "No question is a bad question."

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_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc

WARNING - Common sense prevails here.....

Does this sound easy to answer? Which came first, the chicken or the egg? How about this question.... Do you know the difference between a pre-qual letter and a pre-approval letter? Both answers could differ greatly, depending on who you speak to and who is a professional on the subject matter and who isn't. I just wanted to dig a little deeper into this. There seems to be a major misunderstanding in my opinion.

You first need to read this post by Steve Kappre & the comments: Pre-Approvals that pack a Punch (or real Pre-Approvals) - He did an excellent job of doing a quick breakdown of what his pre-approvals consist of and how he operates. This prompted me to continue this discussion after reading some of the comments.

Pre-Qualification vs Pre-Approval

Keep in mind that these definitions/explanations are not from Webster or an online site, but that they are based on my opinions with 16 years in the mortgage industry.

Pre-Qualification Letter - The loan officer screens the borrower while asking questions and pulling their credit. I wrote a blog on the types of questions that I ask. Is pre-qualifying rocket science? Each loan officer has their own way of asking specific questions. I am not here to say which is right or wrong. But I will say that some of these questions are never asked in the initial screening process.

Pre-Approval Letter - There are a few ways to look at this. In my opinion, and from talking to a few seasoned loan officers; you should be collecting pay stubs, bank statements, and running a credit report. Depending on the type of work that the borrower performs, you might need W-2's and or tax returns. If it's a complicated pay history, then you need to order a VOE, verification of employment. This will tell the story of that borrowers' pay history for the last 2 years and their year-to-date.

Once the information is verified, you then run it through one of the different automated approval systems. Then the documents should be verified and reviewed by an underwriter. Now, here is where the debate comes into play.

By having an underwriter or a junior underwriter review these documents, you are essentially giving them a full approval. In Steve Kappre's case, he reviews the documents himself and then runs it through the automated system. Hey, I have no problem with this, because Steve is experienced and I know he knows what he is doing. Besides, Steve and I have spoken on several occasions. But from the technical word of Pre-Approval, essentially what this means is that you are approving the borrower without a property address. Let me ask any of you this. How would you define approval? Answer? Please leave me your answer below. Then what would pre-approval mean????

Commitment Letter - Now the fun begins and who said mortgages were boring. You can basically say that a pre-approval letter should be like a commitment letter. With a commitment letter, you already verified income, assets, and credit. There would be other conditions on the commitment letter though. If an appraisal has been done or not, that would be on there. Another condition would be for clear title and homeowners insurance. The rate and term would also be on this commitment letter.

As stated, this can be an interesting topic with varying answers. I am not saying that my statements are 110% correct, but I will be stern with my statements to say that I would love for anyone to debate them, to tell me that I am off base per se. Here is the reason why...

In order to offer a pre-approval letter without running the documents through underwriting and in some cases, not even asking for documentation upfront, but taking the word of the borrower (yes, loan officers actually do this), you need to be better than good. Even a good loan officer might miss these items, which could cause caos prior to settlement. Here are some of the items in question :

• if you don't know how to read a pay stub in calculating their income - ie : if the borrower is paid twice a month and not every 2 weeks, the calculation is different. - 24 pay periods and not 26 pay periods.
  
• or that you don't look at the details of the bank statements and didn't notice any large deposits, which need to be explained no matter what
  
• or on the pay stub, you missed their child support payments
  
• or not going over their credit line by line, but just assuming that their credit score fits the program, that you are okay....

Conclusion : Yes people, this happens more often than one would think. Loan officers such as Steve and myself are good enough to be able to hand out a pre-approval based on what we have asked and sometimes see. Hence why I tell most realtors that my pre-qualification letter is just as good as my pre-approval letter. If I don't feel comfortable with the debt-to-income ratios, then I run it through the automated underwriting system.

Overall, I would say many loan officers aren't experienced enough or knowledgable enough to give out a pre-approval letter, let alone a pre-qualification letter. Remember Houdini? Let's assume this, that I am a magician, that I think I am good and that I know what I am doing. Could I perform his underwater tricks while handcuffed and come out alive? I would bet not. The same thing with the average loan officer, who couldn't perform the same with a pre-qualification letter. People, the loan officer needs to know what they are doing and not just assume. Many questions aren't asked in the beginning. I know this after screening the borrower in which they have spoken to a few other loan officers. Yes, it's that scary and it's the truth. This is not to scare homebuyers, but to make them more educated. Again, please read my pre-qualification steps and match them with the other loan officer. If they don't ask 80% of these questions, it could be a rough ride. What questions should be asked when you are being pre-qualified for a mortgage? PS.. keep in mind, these are my opinions.

IMPORTANT QUESTION : Loreena Yeo asked this question - Question #14 about approvals - Yes, you can get an approval without having a property. You can still get a commitment letter without the property address. Hence my whole issue about pre-approval letters. In reality, it should be the same thing. It's more work for the lender, but it's official because an underwriter has reviewed all of the documents. I have done this and what is usually subject to verification is the appraisal and title work. Almost everything else has been verified and approved. The address on the commitment letter would have TBD, to be determined.

The problem with this step is that most lenders wouldn't go this far now, because many are 20 days in underwriting and 45 to 60 days to close a loan. But you know what, at Infinity Home Mortgage, we still underwrite loans without appraisals in some cases. If the file is ready for the underwriter, but we don't have the appraisal, we still turn it in. We will even underwrite an appraisal as we still process the loan. In tough times, you try to be proactive.

The difference between a Pre-Approval and a Pre-Qualification letter. - Another blog of mine on the same topic., just with a different twist and view.

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- Energy Efficient Mortgages -

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Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc

Blogging, is it dead or dying? Social Media Networking, is it a fad or will it just be dust in the wind by next year. Shopping online? Searching online? Where does it all begin and where can it all end.

Now, I am not an expert when it comes to such subjects, nor do I do this for a living, but I do have my own strong opinions in regards to these specific topics. Keep in mind, much of what you read about is opinion over time.

Recently there have been a lot of posts written about these subjects and what inspired me to write about this. I listed them below. Please read: __________________________________________________________________________________________________________

• Getting My Daughter High at the Beach. by : Joel McDonald - Joel states this in his blog... "Before I Let me start off this post by saying "your headline is everything." ......."

I have to disagree with that statement and I will explain why. But a boring headline that has key words, will get your searched. And ps... yes, a catchy headline can be good at times, but if you fool the reader, to get them there, you could lose that same reader for good.

• Blogging is Dead - by : Courtney Cooper - This post was written because of a comment that David Gibbons stated on Twitter. "Blogging is Dead". My opinion about that statement? Just an attention getter, right or wrong.

Courtney brings this up.... "I keep hearing that blogging is a dinosaur,..... Twitter and Facebook ... The growth they have both seen this year is truly phenomenal. Is social media taking over blogging?"

And then she goes on to say that she doesn't believe that blogging is dead. I agree ...

• I am an Active TwitFace.... are you? - by : John Cannata - John talks about his daily routines both on Active Rain, Twitter, and Facebook, and how he thinks it's important to socialize on these.
  

• Re-defining ROI in the age of social media. - by : Matt Stigliano - Matt shares his opinion about ROI's when it comes to Twitter and Facebook. ROI is your return of investment. He lists some good examples to why this is good.
  

• A "soft-sell" approach to marketing your listings on Facebook w/seller participation by : RealEstateSupport - A great way to market your listings on Facebook.
  

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Social Media Networking & Marketing.... I will admit, I did get caught up in the craze about 10 months ago and even wrote about it, Social Media Marketing, and it's importance.

Sure, I think it's important to network and to socialize online. Here are my opinions on the 3, Active Rain, Twitter, and Facebook.

Active Rain - I love Active Rain and a networking group like this. I think it's easy. You can blog and comment at your own pace. Network with others from all over. And you don't have to be right in front of your computer/cell phone 24/7.

Twitter - I think this could be a fad. Sure, you can follow people in a group on twitter through tweetdeck, but a lot of what happens here is in real time. Which means you have to be visible often, sharing updates.

Facebook - I think it's easier to follow people here. Sure, the main page is in real time or you can go to someone's profile page and she what they have written lately. I think this is easier than what's on Twitter. You can also start a fan page and give updates directly there. My fan page on Facebook : The FHA Expert

Blogging and titles of Blogs :

- Blogging - I don't believe blogging is dead and will never be dead. Yes, I hate saying that word never. But my common sense would state that as long as people use the internet for searching, they will find your blogs.

I have talked to people such as Ken Cook about this matter, who is on top of the social media networking concept. Ken Cook and Jason Crouch hold a weekly call about this and supply some good information. Find them on their Blog Talk Radio show. Social Media Edge - Talk Show

My point to this, and Ken agrees with me, is that blogging will always be there and I feel that it's better than interfacing with such things as Twitter and Facebook. Here is why...

Twitter and Facebook is real time in most cases. You need to grab that persons attention now or in the first 24 hours. In regards to blogging, you could blog today and be searched :

• that same day

• the next day

• a week or month from now

• 6 months to a year.... etc, etc. I closed 3 deals this year from someone finding a blog of mine over a year ago.
  

With blogging, you are planting seeds and if you use the correct tags and hot key words, you will be searched. Keep in mind, writing good content is important. Confusing for those that are new to this? For more information about blogging, please read : Crash Course on Blogging In my opinion, blogging will be here to stay as long as the internet is active and that people search online. Keep in mind, more and more people are becoming informational 'hogs'. Some people love to read.

- Titles of blogs - I do believe a catchy title can work. But I don't think they serve its purpose as many would think and or assume. If you make people curious, they will come and look. But will they stay long? And keep in mind, this is like a quick fix, but titles don't usually last long in the blogosphere. Not unless you have some of your 'hot' key words in the title.

Key words will out last a catchy title any day of the week. Example : I am wrote about those listing agents that don't accept offers with FHA loans. Which title do you think would work best for me?

1. Listing Agents can destroy a perfectly good offer. - Catchy, but it would be hard to search for this, unless you used those exact words.
   
2. Those offers with FHA loans. - Good to capture those searching for FHA loans.
   
3. Sellers !! Ignore what your listing agent tells you about FHA loans !!! - A catchy title and some have said misleading. But it also has a few good key words that can be searched in several different combinations.

Summary : In my opinion, just use common sense when writing your blog and especially when writing the title of your blog. Do you want to be a rock star for a day or for a life time? I would rather be found now and later, and not just razzle you with headlines, looking for attention now.

Overall, don't get me wrong. The blogs that I mentioned above, they all bring up some very good points and tips. And I know you can get business from Twitter and Facebook. And you can use either one to get your blogs out there. But after speaking to a few others that are knowledgeable about this topic, I think a lot of what we hear is opinion, proven by fact, but facts that can be used for their argument. What about the flip side of the argument? Me? I want to know to know the possibilities and example of both sides. thanks

For AR Members FOLLOW ME ON FACEBOOK

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

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Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc

FHA mortgages, such a very very bad thing. Don't do it... Don't allow your buyers to utilize this program. Don't allow your seller to accept offers with FHA mortgages. They are very very bad....

HOLD THE PRESS !!!!.. Wait one second. In the real estate and mortgage industry, don't we get angry when someone offers their professional opinion on a topic or question that they don't know much about. That their advice could be an assumption, or from prior years, or from a bad experience?

PS. my initial comments above was a joke. FHA loans aren't a bad thing at all and I am angered by those that say otherwise. In many cases, FHA loans are much better than conventional loans. Please read: FHA loans vs Conventional loans

Sellers, fire your listing agent if they tell you not to take an FHA offer !!!! They could be costing you lots of money. Unless you just don't care about throwing money out the window, this is extremely poor advice. PS... fire an agent if they tell you not to accept any type of offer that is part of any type of financing that you might not agree with. ie.: VA loans, FHA loans, USDA loans, conventional loans, etc, etc.

So what sparked this blog? The reasons are these two comments from a recent blog comparing FHA loans and Conventional loans. Amd keep in mind, these 2 comments are coming from realtors defending FHA mortgages.

1. Chris Olsen wrote this comment : Comment by Chris - He states that a seller accepted a conventional offer that was $10,000 less than his clients FHA offer.
2. Karen Crowson wrote this comment : Comment by Karen - She states the bias opinions from other realtors.

Here are the false assumptions about FHA loans :

• Only for first time homebuyers

• for those borrowers with poor or bad credit

• for those with no money

• FHA loans take a longer time to process or close - FALSE

• they are more expensive, have higher fees and or rates. Again, False. Every mortgage lender has a profit margin, regardless of the type of mortgage. If someone is charging you more on a FHA loan, it's purely out of greed. Here is a good example. FHA fees and why I was charged more. Please read the 2nd paragraph.

• appraisers are more difficult on the appraisals. This comment is so 2002 and prior. Yes, this was sometimes an issue back in the '90s. But HUD changed the appraisel requirements about 7 years ago. If the appraiser is very picky, that's not because of FHA. (I would love for some appraisers to chime in here and I will post your answers.)

• You could have problems even with conventional appraisals now, because of the new HVCC rules that have been implaced with every lender. Darin Osenberg gives you feedback on these HVCC guidelines. Please read : HVCC and could it be trouble for conventional appraisals?

• If you have 20% down, conventional is the way to go. FALSE.... it depends on your credit score. Please read this. FHA Loans vs Conventional Loans - 20% down - A Rude Reality Check

• a lender that is asking for more information that you expected, because it's an FHA loan. Or who wants another appraisal, etc, etc. These are not always because of HUD or FHA, but because of specific investor overlays. Just keep this in mind.
  

Conclusion : Pick your realtors and loan officers wisely and very carefully. We all should have your best interest at hand, as a buyer or a seller, but this is not always the case. Is this negative? Yes, but it's the truth and it's reality. Just do your research carefully and keep the emotions out of your decision. Sure, easier said than done.

Overall, these negative comments from realtors about FHA loans usually come from old time realtors that haven't left the 90's, from those new realtors that don't know any better, or just from someone that heard a comment by another agent. You know, that trickle down effect. If someone gives their opinion as a fact, sometimes that other person listening will do the same. Just beware...

PS... I don't make any extra money by promoting FHA loans. My job is to make sure that the borrower gets the best type of mortgage out there that suits their needs and goals.

RECOMMENDATION ?? Maybe have all sellers receive a booklet from the NAR or the local real estate associations / boards, describing the different types of mortgages out there. And that each seller has to sign the booklet, stating that they did at least receive it. I would bet this would be very educational, at least in my opinion.

Please read : FHA loans aren't a bad things and the reasons why.

FOLLOW ME ON FACEBOOK

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- Mortgages -

Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc

FHA loans seem to be one of the main choice of mortgages in the last 6 months or so. There are several reasons for this, which should be spelled out below in my comparison. What I hate hearing is that FHA mortgages have taken the spot of the subprime loans. This is not true by any part of the imagination. This statement is from those that are inexperienced in both the mortgage and the real estate industries. The realization has been that 30% of the subprime mortgages in the last 5 years previous to the last 2 years should have been FHA mortgages, not subprime.

To compound this, so many said just because you had a conventional loan, you had the better loan. This was not always true when putting 3% or even 5% down. In most cases, you were told this, because that particular lender was not FHA approved. Now? Even with 10% down and credit scores less than 680, FHA loans in many cases, will be the best mortgage for you. You want to see a shocking example? Here is an example of 20% down and it shows that the FHA loan was still better. Please read : FHA Loans vs Conventional Loans - 20% down - A Rude Reality Check

So you could argue the fact that this is my opinion, that FHA loans in many cases would be better for you. True, even though I have over 16 years of experience as a loan officer in the mortgage industry. But numbers don't lie. Let me show you.....

The example below is based on a $280,000 purchase price with 5% down. One reason why conventional rates are a little higher in this scenario as in FHA rates is because Fannie Mae and Freddie Mac have added penalties per se. If you are putting down less than 30% and your credit score is less than 720, certain fee penalties would apply to you, which would increase your rate. The FICO (credit score) that I am going to use is 679, which is above the average credit score and I will still show in this example that FHA loans are cheaper, even with 5% down.

***And keep in mind, some lenders have penalties on FHA mortgages with credit scores under 660. And many lenders can't do FHA loans under 620. Just beware of those that promise you a mortgage with scores under 620. It can happen, but they aren't as easy as advertised.***

Disclaimer : These rates are examples, but the spread shown in the example is real. To compare this scenario apples to apples, the fees are the same and with zero points. In this scenario, there is a $475 commitment fee and points. The conventional rate also includes the penalty for the 679 credit score.

Some of you might be saying that you will be adding $4,655.00 onto your principal balance if you did the FHA mortgage because of the FHA one-time mortgage insurance premium. This is correct and I don't want to confuse you with more numbers and charts. But here is a quick breakdown. If you kept your house for 5 years, you would have saved $11,916 in payments in 5 years. Subtract the Upfront Mortgage Insurance premium from the monies saved in 5 years and you have saved a difference of $7,261.00!!! And one other thing that is very small, but still makes a difference. You will be subtracting a few more dollars per month from your principal because your interest rate is lower, which would offset the interest that you would write off on the 6.25% rate. Just something else to remember, but consult your tax consultant or CPA.

Lastly, keep in mind that depending on the area that you are buying or refinancing in, that you might not be able to get a conventional loan unless you have 10% down or a 90% LTV. The reason being is the mortgage insurance companies and how they view certain geographical areas and declining market areas.

For more FHA loans vs conventional loans comparisons :

• FHA loans vs Conventional loans - A true numbers comparison with 5% down - 12-20-08 -Using a 710 credit score
  

• FHA loans vs Conventional loans - A real comparison with 5% down - 11-15-08 - Using a 659 credit score
  

• FHA Loans vs Conventional Loans - 20% down - A Rude Reality Check - 04-03-09 - Would you believe that FHA loans could be cheaper even with 20% down? Come see why and how.

• FHA Loans vs Conventional Loans - 5% - 4 comparisons that you need to know - 05-02-09 -Comparing a FHA loan against 3 types of conventional loans with different types of monthly mortgage insurance. Guess who won while still using a 679 credit score.....

• FHA loans vs Conventional loans - Knowing the true comparisons - 07-10-09 -A great comparison with a 679 credit score and 5% down. This example will still show that even with a better than average credit score, that FHA loans are still better in many cases.
  

FOLLOW ME ON FACEBOOK

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- Mortgages -

Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc