Ken "Yes You Can" Cook

Even if you have been working with your favorite real estate agent for the last 9 months, even if you have already looked at 20 homes with your favorite agent, even if you have already had the home builder install your favorite colors and appliances, I will not do your loan until you call Tommy T Thomas over at Big Builder Incorporated and speak with one of his agents. Now you do not have to buy one of Tommy T's homes but you do have to go look at one and let the sales agent check your contract with the home you think you want to buy.

Sounds ridiculous doesn't it? It would be an insult to you as an agent or builder for me to require "my preferred agent" to read over the contract would it not? Even if I said, "You have to do this but you do not have to use my agent. They are only involved as a safety net to make sure if you can't get it done they will step in and make it happen."

There is no difference when you as a builder, agent or real estate broker demand my client, with whom I have been working for months, in a business I am as good at as anyone in the nation, speak with some other lender. Especially when that lender is my direct competition. You think I don't remember that the next time I think about referring one of my hard earned clients? How would you like it if I kept a list that I gave to my preferred agents and said, "Never show any of these homes from this builder or agent because they pull this monkey business."

Yes, monkey business. The reason they give is to "make sure in the event the current lender can't get it done 'thei' lender can". Okay, that's insulting. If I can't get it done THEN you defer to someone else IF my client, the one I created with my hard work and advertising who may not even originally have been interested in purchasing a new or additional home until they spoke with me as a result of my efforts.

What if you went to Snarky's Department Store and pulled out your trusty credit card to pay for your purchase and the sales clerk handed you an application for a Snarky's credit card and said, "We can accept your major credit card but first you have to apply for our Snarky's card"? Or what if you actually spent all of your time driving around to business association meetings and loan officer's conference handing out your cards and sending greeting cards and newsletters and doing free workshops to generate prospective clients but when you went to present a contract to the listing agent they said, "We'll accept this after our inhouse agent has a chance to sit down with the client and review your contract and make sure you've done it right?"

Oh, I know, you've got the hammer of threat of law under the buyer-broker agreement. How nice. Now you're going to tell me about the time your clients were pre-approved with so-and-so and how the pre-approval wasn't worth the paper it was printed on. Be careful what you say, I've been in this business for a long LONG time and I have a lot of horror stories that fly in all directions.

Yesterday, a client I have known all my life, working with an agent whom I have known all of her life, called and said, "The seller won't accept the offer until they get me pre-approved with their bank." My first thought was, "well it's a bank owned property and some banks work that way." In that case I really didn't have an objection but when I found out it was the LISTING AGENT and not the SELLER and the LISTING AGENT/BROKER required the pre-approval from a CORRESPONDENT LENDER and I work for a DIRECT LENDER I definitely took note of it. I took note of the listing broker's name and the listing agent's name for future reference when I have clients who are shopping.

Think about it, comment about it or state your case. I know what you may say your reason is but I will remind you what an insult it is to a consummate professional who generates their own leads and refers them to local agents. It really just confuses and concerns the client and if that's how you want to treat your clients you can know what they think of it - they do NOT like it. Clients are very careful with choosing with whom they share there very private and confidential information and being forced to do so does not make them happy. I know it doesn't because even when they are not my client I have had them call me for my professional opinion on this specific activity. And do you know what they suspect you of? That's right ... under the table agreements with the lender to get an illegal kick-back.

Every loan officer who has done their job for more than a week or so has heard the question. Some loan officers avoid it altogether by simply not sending the Truth In Lending (TIL) until they absolutely are required by law to do so. Why? Because in the top left corner in prominent font is a number that confuses almost every borrower and non-financial insider - the Annual Percentage Rate (APR).

The APR disclosure requirement was sort of a good idea when it came out back in 1968 when there was pretty much just one type of home loan: a 30 year fixed interest mortgage. With time and exotic mortgage solutions the APR became highly obfuscated and even a tool of obfuscation.

Recent changes to the RESPA laws and the injection of the Mortgage Disclosure Information Act (MDIA - call the Mediah by insiders) was supposed to fix what has been broken for years. What it is doing, however, is bottleknecking the process for almost everyone who is using a mortgage to purchase or refinance a home.

The main problem and fault with the APR for the last several years has been the ease of manipulating it by how closing costs and other mortgage related fees can be hidden in the loan or rate to obfuscate the APR. The idea behind the forced disclosure of the APR was to give an apples to apples comparison of mortgage costs. It doesn't work, hasn't worked and another ignorant piece of legislation designed more to give the appearance of help rather than actual help like MDIA is just another road block to home ownership for home buyers.

If every mortgage was exactly the same, all closing costs had to be line itemed and there were no variations in terms them APR would be a more valuable but still useless tool. Here again the intelligent homebuyer is punished because of the few ignorant ones who refuse to take a moment and look at what is really important about home finance. Am I bitter? No. I'm still going to be making home loans and my clients are still going to be paying for them. It's just that sometimes it will take them longer to get to the closing table if anything changes with the loan post application and prior to close - in some cases.

In a nutshell the MDIA law says if the APR changes more than .125% (an 1/8th of a point of interest) then the disclosures must be resent and a period of no less than 3 business days must expire. This means changes to any of the APR tracked fees or loan amount. The law does not say whether or not this applies if the APR decreases or increases just if it changes. Some lenders are redisclosing in both directions other only if the APR increases more than .125%

A quick definition of the APR is the actual interest rate plus the other mortgage associated costs expressed as a percentage of the loan amount over the life of the loan. For example if you have a $100,000 loan and your APR included costs are $3,500 you would first find out what percentage of $100,000 is made up by $3,500. This one is simple it's 3.5% but that has to be annualized so divide it by 12 to get .29% and add that to your initial interest rate - let's say 6% to get 6.29%. So in this scenario our interest rate is 6% but our APR is 6.29% - so you can imagine why people see that TIL and call immediately and say, "I thought I was getting a 6% loan!" When you indicate that is correct they invariably say, "But this paper says 6/29%" When explained to the masses they simply say "oh" and just forget about it!

So what fees affect the APR? I'm so glad you asked. But the answer is variable by the state wherein the property is located. I can give you the ones for Georgia as a reference but your state may be different. Remember all of these fees may not actually be on your loan but if they are they are to be added to the APR.

Georgia APR fees include: processing, underwriting, origination, discount points, broker fees, commitment fee, lock fee, attorney's fee, wire fee, disbursement fee, warehouse fee, amortization schedule fee, copy fee, fax fee, courier fee. There are other fees that may be charged but these are the fees that affect the APR. (These fees may even change from lender to lender believe it or not.)

If you are an agent, home owner or home buyer with questions about APR feel free to call me anytime on my cell at 678-439-8683 and I'll be happy to help you as much as possible.

Looking for a great place to live with some of the best values in America? Look no farther because I am sitting in it right now keyboarding this post to you! On October 6th NBC's Today Show with Al Roker highlighted Marietta, Georgia as the number 4 place in America to buy a home and get the most "bang for your buck".

I happen to agree with them because I live here, have lived here my entire life except a little college stint, and I am very actively involved in my community and lending here. During the boom builders constructed some very beautiful homes which in turn emptied a number of existing homes and left us with a surplus of larger, newer homes. In fact on October the 12th I wrote about "My Home, Marietta, Georgia" which was a featured article here on Active Rain.

We were hit late in the price drops but when we got hit we got hit hard! Sarasota is number one, San Fransisco is number two, is number three is Lansing (another great city), and Marietta (that's me) is number four. By the way, the Gone With The Wind Museum is way down on the list of "pride and joy" of this community. Seriously, only an outsider would say that! Don't get me wrong, it's very cool but the life is in that old town area is very vibrant and that is just one of hundreds of attractions in that immediate area.

You can watch the video here on the City of Marietta's website. When you get finished call me. I'm not a real estate agent - I'm a very seasoned home lender based right here for my entire career in Marietta, Georgia. 3300 homes in the Atlanta/Marietta area have been financed across my desk I have a pretty decent "handle" on the market here.

By NOW! I mean if you have not called a loan officer to get qualified, found a property and made an offer you're dangerously close to missing the First Time Home Buyer's Tax Credit. I know what you hear in your mind, "it's good through the end of November." You would, of course, be correct in so saying. Your correctness would be equivalent to leaving New York City for a trip to Tokyo to see your best friend's wedding which happens at 5PM your time and you are getting on a jet at Noon your time the day of the event. In other words it's "possible" you can make it on time but not very likely with the available equipment.

I know there will be loan officers and others reading this who will say, "shoot man I can close a loan in 8 days". Well, so can I. But it's by far the exception and not the rule. If you are a first time home shopper and you are reading this pick up the phone right now and call your local loan officer. If you just have questions feel free to phone me at 678-439-8683 and I can answer some questions for you.

Here are some pointers to speed the process and hopefully close before the end of November:

• Get prequalified right now, today. Not in a minute RIGHT NOW.
• Once you are prequalified ask your loan officer for a list of "findings" this will likely include:
  • Last two years of tax returns all pages all schedules
  • Last two months of bank statements on all accounts all pages (ALL pages)
  • One month's worth of pays stubs (if you get paid weekly that's FOUR)
  • Name of your landlord and their contact information for rent verification
  • Explanation of any credit checks that have been done on you in the last 90 days
  • A clear (CLEAR) copy of your driver's license (photo ID) and Social Security Card
  • If your down payment is a gift a GIFT LETTER and supporting documentation (the giver's paper trail from their bank to you)
  • Name and contact information for your preferred home owner's insurance agent
• Be prepared to get more stuff and don't argue with the loan officer or processor - JUST GET IT

If your home purchase closes on or after December 1st, as it stands today and there is no reason to believe it is going to change, you will NOT be eligible for the tax credit. Trust me, there will be hundreds, if not thousands, of people nationwide who think they are going to qualify for the tax credit who do not get it because they started too late. Today is getting just about too late.

So what are you going to do right now? Right CALL A PROFESSIONAL, EXPERIENCED LOAN OFFICER!

I have seen a blog post and it has been reposted that gives the impression the federal First Time Home Buyer's Tax Credit has been extended for 12 months. Actually it has not yet been extended. Only the house has voted on a resolution titled "The Service Members Home Ownership Tax Act of 2009" which does provide for an extension of 12 months for veterans or service members who spent 90 or more overseas during calendar year 2009.

As everyone knows for a resolution to become a law it must also be passed by the Senate which sometimes adopts the House Resolution as their Senate Bill. I have not seen the Senate Bill which echoes this but I have heard it calls for an extension of 6 months, not 12 months.

I just wanted to make sure you realize this is not a done deal and could face changes or not make it through the Senate. Guessing it will make it through the Senate with that modification is what most industry pundits are indicating.

Meanwhile if your buyer's are not already loan qualified and have made and had an offer accepted you're headed for a very bumpy ride at best.