Margo Marshall

I am talking about a mortgage broker. Should we use them? I am a well-seasoned Realtor here in Jacksonville, Florida. Let’s be honest, not only have times changed but we are in unprecedented waters of change. Like most realtors, in the past I had relied mostly on my tried and true lender tied to a major reputable bank. I did not see any real benefit of using a mortgage broker.

These days I am finding that sometimes you need 2-3 lenders to close a sale. More and more realtors are realizing the benefit of using a mortgage broker just for this reason. If needed, a broker can submit the loan to multiple lenders until he finds an approval without stressing out my client since he simply forwards the documentation he already has to the other lenders. This saves time and stress because without a broker you would have to start all over if you wanted to apply to multiple banks on your own.

After further involvement with a broker I gained a deeper understanding of their function and the additional benefits they added to my business. A mortgage broker is typically associated with many banks. Sometimes over a hundred but they typically utilize 3-5 major lenders on a regular basis. The others are there when they need to place a loan for unusual or non-typical situations that typically involves credit or property types.

For example, a borrower wanting an FHA loan with only a 580 middle credit score would have a hard time finding loan approval with a major lender since they typical require a 640 or at best a 620 middle credit score. Most brokers have access to lenders that accept FHA loans with a 580 mid score. In addition a broker can also find lenders who accept properties that the mainstream lenders shy away from such as manufactured homes or condos.

A word of advice before you begin working with a broker, be sure he/she has many years experience as a loan officer since they need a very good understanding of the business to work in that environment.

The anaconda just ate a huge hog. The hog is progressing slowly through the anaconda. The hog represents the inventory of foreclosures and the anaconda is the housing market.

According to Barclay’s Capital are about 2.4 million home loans 90-plus day delinquent and about the same amount of homes already in foreclosure. This inventory of about 4.5 million in shadow inventory should reach the high point this summer and then fall off, as the market absorbs an estimated 130,000 distressed properties per month. New foreclosures dropped for the first time year-over-year since these statistics began measuring this trend since 2005. The hog should be passing towards the back half of the anaconda.

REO’s are still at record levels but the initial stages have declined substantially. Barclays’ optimistic prediction is that the worst, if not over, is close to being over. The further the hog progresses through the anaconda the fewer deals we’ll encounter. A year ago, buyers were keeping on the sidelines because they were concerned with catching a falling knife – buying a home for $250,000. only to see a comparable property fetch $230,000. three months later. We believe those days are over, which is one reason we continue to implore those on the sidelines to get in the game. Now is the time to buy.

The hog is moving towards the back half of the anaconda. Mortgage rates are another reason to buy now. The 30 year fixed rate mortgage is looming around 5% and the 15 year at about 4.5%. They will not be sinking especially given the optimistic outlook on jobs and the economy. The expectation is for mortgage rates to rise. Now is the time to buy.

We are not particularly worried about the end of the federal homebuyers tax credit. After all, the only way to discover if a market is truly healthy and viable is to stop subsidizing it. The market needs to and will return to an era of fundamentals. People recognize that the combination of low rates and lower home prices represent a great opportunity to buy today. Our market offers good fundamentally sound deals that can be financed at good economically advantageous interest rates. As this catches on, the anaconda will rid of the hog and it will be no more.

Recently, a great mortgage broker whom I work with specializes in credit repair and it saddens me to see intelligent well-intentioned people taking steps to improve their credit using logic and actually end up destroying it!

Paul was telling me of a recent example - a gentleman that he pre-approved for a mortgage with the intention of buying a home within 45 days. His credit was borderline but he was able to get him pre-approved. He warned him NOT to touch his credit. Two weeks later, this customer called and proudly announced that he "sweetened" his credit score by paying off two collection accounts that appeared on his credit report. Paul told him (in a kind but factual manner) that he probably killed his chance of qualifying for a mortgage.

Unfortunately, an old collection has less impact on your credit report than a new one. When the collection was paid off there was "new activity" on the account. The rocket scientist who created the credit rating system states the credit bureau uses this information to evaluate credit and identifies this "new activity" as a new collection (in the short run) and the credit score will actually decrease. The benefit of the postitive action taken on the account by paying off will be realized in about six months.

Paul strongly suggests that before you act on a logical action to improve your credit to first check with a well-seasoned expert. Better yet, Paul Gregory will get it done for you! He can be reached at (904) 415-5166 in Jacksonville, Florida.