Lewis Poretz - - Maryland Mortgage Expert -

A 30 second anatomy of an FHA loan –

What you NEED to understand…

FHA loans have two major advantages.

#1 – they allow a purchase loan with only 3% of borrower’s funds in the deal. These funds may come from allowable sources such as mom and dad, employer, church. They also allow up to 6% seller help.

#2 – They allow cash out refinances to 95% of the value of your house – for now anyway.

The myths - FHA loans are for poor people or clients with terrible credit. NOT TRUE!

Think about it. FHA will allow you to purchase a home with NO MONEY out of your pocket. And FHA offers JUMBO loan amounts as well. FHA is the ONLY program that will allow cash out at 95% loan to value. FHA is the hottest loan program on the market!

FHA has mortgage insurance --- ok, so what.

Conventional loans over 80% loan to value do as well and the factors are much higher than FHA, which means on loans over 80% loan to value, an FHA loan payment will typically always be lower.

If you are looking into a loan and someone is advising you against an FHA loan, seek advice elsewhere. Understand your options.

FHA experts

It's back to the basics for me the past few months. I am out calling on agents again and I am lovin it. You see, times have changed. The very same agents who wouldn't give me the time of day in the past now inviting me to have a seat and chat. And that is just what I am doing. You see, I am finding out the agents with staying power, the ones that are "lifers", appear to be like a sponge just longing to learn about the products available in today's market and truly understand the mortgage lending business. This is a wonderful thing for me because these agents will always be on the same page as me and it will ensure we work together instead of against each other.

I called on a particular office today and met with an agent who seemed like a seasoned vet. I asked how business was and he seemed a bit bitter, which is totally understandable.... I suppose..... I went on to tell him my mortgage shop was actually having a really good month and purchase business was heating up. Then I asked him if he understood the USDA loans. He quickly told me he doesn't do those bad loans. He said they were the loans that got us into this mess.....

Hmmmmm... ok.......

I tried another approach. I asked if he did Veterans loans. He told me he would not put a client in a car if they didn't have any money to put down. He said that is what caused this whole mortgage mess.

I suppose in some convoluted way I guess he had a point. But explain this - If I can take someone who is renting and turn them into a homeowner with no money out of their pocket AND a monthly payment the same as rent - well, to me that is a BENEFIT to the borrower. Sure the whacky 100% No Doc loans went way overboard, but those traditional 100%'ers have been around forever.

I am interested to see everyones comments on this topic.......

Maryland Mortgage Expert

.......... I'm having a nervous breakdown... drive me insane .......... ohhh sookie ---- Da Da Da Da Da Da Da Da Da DAA Da Da

Ok - so I stole a piece from the repertoire of what AR legend Jason Sardi adds to his blogs... a bit of musical transition if you will..... now here goes -

I have been working with a realtor for the past 4 months with a client I have been working with for almost a year that I had pre approved and somehow he hooked up with. This agent seems like a nice enough guy, 20 + years in the business, very friendly and engaging on the telephone. But I saw it coming...... Our first conversation started out with him asking if I would honor the rate on the good faith I had supplied these clients --- my clients! - THREE MONTHS PRIOR!

These clients came to me with mid scores in the 400's. I got to give it to them, with great effort, lots of letters to the credit bureau and some slick negotiating with past creditors, their scores got better. Mind you, they are still sub 580 however I can get this loan closed with a manual underwrite as it meets all the guides and there are strong compensating factors. Besides the fact with proof of a few more accounts paid, satisfied and removed I can get them approved through automated underwriting. They are almost there.

Well I tell you, Mr and Mrs Realtor, will you please concentrate on selling houses and leave us mortgage brokers alone when it comes to what rate we charge the borrowers. I apologize in advance to the responses this post will get but listen up people, unless you understand what hits to the price a sub 580 score gets and how much time and effort it takes to submit a tight package to my underwriter, please leave well enough alone. I can open that can of worms on every listing in your pipeline. I elect not to, please do the same. Now my client is asking why can't he get a rate in the 5's like he sees on TV. 97% FHA - 3% gift from mom, 4% seller help, sub 580 scores...... STOP THE NONSENSE!

So that's where I left it six weeks ago. Today I get a call - " hey Lewis, the bank ( it's a short sale of course ) said they will take the deal, can we still close this month? " Well Mr Realtor, yes we can but I need the contract so I can get docs drawn up, signed and submitted. He told me that he can send me the copy that is signed by the buyer and seller but he only has a verbal from the bank ........ I DID NOT FALL OFF THE TURNUP TRUCK LAST WEEK!

How many of you have seen a short sale turned around in - let's see today is the 21st and they want to close the 30th - well, that fast? Can we get it to the table that fast? You betcha! Let me ask are you mortgage gurus a question ---- How many of you submit this loan without the banks approval? Without knowing what the bank will actually accept as a payoff? And without knowing the balance on the property?

It is a short sale people! And neither listing or selling agent knows the balance owed on the property.

THERE ARE REAL LOANS AND THERE ARE MAKE BELIEVE LOANS - do you know the difference? I do.....

MARYLAND FHA EXPERT