You Can Still Get A Mortgage!

It's been sometime since I last "blogged". I've gone through some serious personal issues with my Dad. I am going to do my best to provide new posts at least on a weekly basis going forward.

Since my last post, the mortgage and credit markets have continued to tighten, the economy has worsened (in my opinion), gas prices have sky-rocketed, mortgage rates have risen, and banks have frozen existing lines of credit due to the declining real estate values. It's been quite a year!

There is good news, though! YOU CAN STILL QUALIFY FOR A MORTGAGE!

That's right! Customers with decent credit can still easily qualify for a new mortgage provided they can document their income, assets, and put down at least 3% of the purchase price. This really isn't too much to ask! Many, not all, of the current foreclosures are due to customers with poor credit qualifying for Stated Income or No Documentation loans that they (in hindsight) should never have qualified for in the first place. It's unfortunate but the customers should also have realized that they couldn't afford these loans.

The people who are being unfairly impacted in this new market is the business owner with great credit, who legitimately makes money but can't show it the way a salary worker can. This is the person that Stated Income loans were originally created for.

The market, while being difficult, is really normalizing back to the way it used to be. When I purchased my first home in 1991, I put down 20% of the purchase price, showed the bank 2 years of W2's along with current pay stubs, bank and brokerage account statements showing my cash reserves and where my downpayment was coming from.This was expected and not considered unreasonable.

Bottom line - salaried workers with good credit can still qualify for mortgages. And, it's a great time to be buying real estate.

Visit my website at http://www.stevehawk.biz or send me an email if you're interested in learning about your mortgage options.

Have a great week!

Mortgage Pre-Approvals and Open Communication

Prior to all of the issues surrounding the sub-prime mortgage sector, which has caused most if not all lenders to tighten their underwriting guidelines, a mortgage broker could issue a pre-approval letter based on the fact that they would definitely be able to place the loan somewhere. An applcation, in most cases, would be taken and credit run and a pre-approval letter could be generated within an hour. Stated Income, First Time Homebuyer, 100% Financing, a late payment on an existing mortgage -- these and others were non-issues.

Well, the times have changed! I know mortgage brokers who've used the quick issuance of a pre-approval letter as a way to gain the confidence and hopefully the business from customers. You still have the stellar credit, high income borrowers who are putting down 20% and can get approved everywhere. But, those people are few and far between. It is now imperative to take more time and effort to ensure that the loan that you pre-approve your customer for can actually close. A credit approval at the very least and ideally a commitment letter from the bank is now what you should provide to your customers. You also need to counsel your customers and realtors that "may" have issues down the line that banks are constantly changing their guidelines and that based on the information provided and on the current credit situation, I can place your loan today. That may or may not be the case tomorrow.

Obviously, I am referencing customers that today would fall into the Alt-A or Sub-Prime buckets. People who can't prove their incomes (self employed), don't have a ton of assets, have a low credit score. I know personally of many sales that have been falling through due to the buyers not being able to obtain the financing that they thought they could get. Providing honest information throughout the process can help to avoid this. (http://www.stevehawkmortgage.com/)

Another Benefit of working with a Mortgage Broker

I'm working on a situation currently which made me think of one of the benefits that customers have working with mortgage broker rather than a direct lender/bank.

My customers signed the purchase contract, put down 5% (which is the max they can put down), sent me their income docs, and I ordered the appraisal. The appraisal just came back and, as luck would have it, value is less than the purchase price. The sellers won't budge and my customers want the home. It's a small loan but my customers would need to come up with an additional $7500 for the 95% LTV loan we were going with. They do not have it on top of having to pay closing costs. I need to now get them 100% financing. The bank that I had the original loan placed with will go to a maximum 95% LTV/CLTV.

As a broker with almost 150 different lenders at my disposal, I was able to place the loan with little effort and ease the minds of my customers. If I only had my original bank of choice at my disposal, I would have lost the deal and my customers would be scrambling to find financing.