President’s Day Push

Efficient Lenders Needed! Reason #1 on how my team can help!

With all the changes in the lending landscape I think that it is important to change as well in some ways. The era of increased documentation has lead to increased processing times and paperwork delays. How then can a Loan Officer find the time to help promote their mutual business partners, be present at the networking meetings, attend the open houses, create the flyer’s and have the important face to face meetings with the clients. Let’s also not forget picking up the phone when the agent calls.

This led me to make a change that I have been contemplating for over a year. The reason that I did not take the leap before was always a financial choice. However, much of my business has come from being there to help the homeowner and all other parties through the transaction. To facilitate phone calls, watch the market and be present and visible. The last six months I felt hunkered down in a cave dealing with paperwork upon paperwork to make sure that our deals closed. This lead to less face to face and less time to be ahead of the market with innovative ideas and  good all fashioned face to face business. I felt like a telemarketer not a loan officer.

I decided that I needed to make sure that the files moved even when I was not in the office. While I was out generating more business for myself and my partners I wanted to make sure that the file did not stagnate over an updated pay-stub. I decided that I would hire  a team member that is the best in the business when it comes to creating a sale-able clean loan package. Upfront we will do a lot of work to make sure that the back end the closing is as smooth as possible. Chris Kohler is going to be a valuable addition to the team and I feel privileged that he accepted the role. It has been 9 days that we have began and I think that we have really made it seamless. I have five reasons that I know will be positive for us and all those that we are blessed to work with. So here is the first reason that the new change I have employed will help your business in 2010!

Reason #1 : Two experienced professionals working on your closing

What does this mean?

• My new partnership with an experienced associate will make certain that the smallest details of a transaction (that make or break a deal) are quickly addressed and followed up on. Two sets of eyes are better than one and ensure that no point is overlooked on your purchase transaction.

• Your buyer will rarely wait, if at all to have their question answered.

• While I am Pre-approving your client on the spot, my inside team will make sure our other transactions are still moving forward in an efficient manner.

• Increased Time for Marketing, Open House & Tours

• Continuity in the transaction

• Imagine your life without a transaction coordinator. That is how I have been serving you over the years. Adding my associate will be like having a TA on the lending side so that we can focus on what we do best.

Stay Tuned for reasons 2-5. If you would like a copy of the power point to review at your leisure message me or if you want to hear more about the change in person let’s do coffee. I am really excited for 2010. May it be fabulous for you.

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25% Gross Income. Don’t become a Jones!

When we set out on our home search we often think of a lot of things but rarely do we really analyze our budget totally. For many years Conventional Lending and Conventional Wisdom would tell you that your Housing payment Taxes and Insurance should not exceed 28%. Government Lending would set that standard over the years at 31%.

What do the Experts Say? In the book Total Money Makeover by Dave Ramsey he suggests that 25% is a great number to shoot for.

So what do these percentages mean? Debt to income is a measure of your debt versus your income. In this case the debt that we are talking about is your total housing responsibility. The income is your Gross Monthly Income not what you take home to live on.

Let’s Look at Example – Borrower A makes $8,000 per month Gross Income. Their Future Housing Payment will be $2,700 out the door. Their Debt to income in this case would be 2700/8000 = 34%. Based on conventional wisdom or even the number for government lending this would be higher than we would like to see. However, it is very common that this is acceptable through the automated underwriting engines. In fact I have seen ratios that are in the high 30’s and low 40’s make it through the system. In this example it would be advisable to have a payment that does not exceed $2500 on the government side and $2240 on the traditional conventional thought. According to Dave Ramsey $2,000 would be the max and I tend to agree with him.However, if I insisted on this I would be out of business!

Why are high ratios bad? Just take a look at the numbers as a whole. Going back to Borrower A. Borrower A represents a family of five. They like most families have expenses like daycare, food, insurance, cell phones, and you know the rest. So let’s mock an expense report.

Gross Monthly Income $8000 in a 30 % tax Bracket leaves the take home pay at $5600 per month.

$5,600 – $2,700 Housing – $800 Food – $500 in Auto Loans – $800 in Daycare conservatively = $800 remaining for all the everyday life expenses. It would be impossible to not use a credit card. How could you save for retirement, Christmas, incidentals etc.

Same Example: $5,600 – $2,000 Housing – $2,100 = $1500 which would be better.

So why do we not all buy with a 25% housing ratio? The Jones’. We get so caught up in the need to have a home like our friends. Facing the fact that we simply may not be able to afford a home is just to difficult. We, as a society, have not been taught about the numbers. I realize that some wise individual may read this and say you did not mention the tax benefits of home ownership. You are making a lot of assumptions on net income as they have three dependents, 2106 expenses, and a whole slough of write-offs. I understand that. I also know that I did not include many of the incidentals that we come across or even mention vacation. I simply want to illustrate a point that may get us to challenge ourselves to look deep into our finances. Owning a home is awesome. Living to service the home is not. When you are stressed each month about whether or not you will be able to pay by the first your whole life is affected.

Please consider your entire budget and consult a CPA before you even look at homes – The reason that I say this is simple. If I go to the local lots and test drive a 2010 Range Rover and then I realize that to have a life I would have to buy a base model pickup truck disappointment would overtake me.

My Job as your professional consultant for Mortgage is to lay out the facts – I want to make certain that I set you up for financial success not only a mortgage. I wish that I had been set down and taught these very basic principles before I entered the work world and housing market.

The principles out-lined here are not my own. They are a collaboration of wisdom that has been passed on to me over time and through trial and error.They are opinion. I have seen some great devastation and continue to see situations that are less than ideal and always will. Free will is awesome we are all given the opportunity to decide what is right and wrong for ourselves. I hope that you have enjoyed the material.

State Workers: 3 quick tips to make your home purchase smoother.

It’s not a secret state workers wages are being messed with! If you are a State Worker and you are looking to buy a home in today’s Market I suggest that you do the following 3 things to help make your home purchase smoother:

1. Get a Verification of Employment upfront – The VOE is something that your Loan Officer can walk you through. It is a complete breakdown of your income over the last two years and the current reflection. If you receive OT, Bonus or other compensation it should be spearated out on your VOE. This will help to take averages over time. Be sure you Employer uses the remarks section for anything out of the ordinary and states that current income reflects FURLOUGH!
   
2. Qualify with only your base Income when possible – On the VOE (verification of employment) there is a box for overtime and bonus. I am certain that the state will not mark the box that says likely to continue. With that the underwriter will not use it. This can significantly reduce what you qualify for. To avoid having to argue with an underwriter about this type of income don’t use it. The Underwriter is always right (so they think).
   
3. Check In Frequently with your LO to make sure that the approval amount still stands – If it takes a while to find a home which is common make sure that you and your LO communicate any and all changes. As your pay is changing so are rates. You can never be over cautious. It is to the benefit of each of you to make sure that all is well and still stands.

There are many other things that you can do to make sure that as a Satte Worker your approval stands. These are only a few of the suggestions and tips that I offer. If you qualify well within your budget 25-35% Debt-to-income then changes in your income will have little to no impact on qualifying. Be sure that you plan ahead not for what your pay will be when the furlough ends but what it may be in the meantime. The State is a mess and it may be a while before we have it ironed out. We will most likely be paying more in taxes with less wages for some time.

Where have I been? My first uncut video post explains this!

I just wanted to take 3 uncut minutes of your time to let you know where I have been. I can’t wait to get back to my blogging schedule and providing you the useful information that you have grown accustomed too. Please take a minute to watch my newly constructed YouTube work in progress. Thank you all for your patience while I work to bring you the best Mortgage Information in the easiest ways too understand. After all this is California Home Strategies “Real Estate Strategies We All Can Understand.”

Home Purchase:How to Survive your 30 day escrow

The market is phenomenal and the opportunity to buy a home is now. Many of you are taking advantage of the opportunity and that is amazing. Warren Buffet said, “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.“  Many of you are listening.

The time-line for an escrow to close is 30 days in most cases. In the thirty calendar day period we need to get our inspections done, appraisals done, have the loan underwritten, satisfy any conditions of the loan and be understanding of the turn-times of the third party services we employ. It is a cooperative group effort. I have given you below a few tips to help you survive the 30 day escrow and sneak out a winner.

Tip #1 – Be responsive to the requests from the professionals you hired- Before you began the process of buying a home you found a few professionals that you felt would best help you through the process. Many times these professionals (Real Estate Agent and Loan Officer) do not make the rules of the game. They are there to facilitate the process. If one of these professionals request documentation or a check for a service be quick to get them what they need. Your process will stop without it.

Tip #2 – Provide the documentation requested – It is imperative to provide all of the documentation requested. Do not try to find a way around it or think that something will be sufficient if that something is not what was requested. If you do not have what was requested get with your affiliate or loan officer and come up with an alternative. Holding back information from professionals that are on your team can cost you in the long run.

Tip #3 – Remember that we are on your side – All too often we forget that we are all on the same team. A victory is represented by a closed transaction. Communication is the key to that transaction. It stems from all parties who all have a lot riding on a transaction. Small details excluded can lead to a disaster that was avoidable upfront. Tell me the property is zoned service commercial and grandfathered in so I may come up with a solution prior to the problem.

Tip #4 – Be Prepared to fight for the home you want – It is not 2003, 04, 05 and obtaining a mortgage is a little more invasive than the past. If you could fog a mirror we gave you money in the past. Now we are asking for Birth Certificates to show the child support will continue for three years. The age on the application is no longer significant. This starts with the investors and trickles down to the buyer. Nothing good comes easy in life. It will pay off to be diligent and fight for the property.

Tip #5 – Everything is time sensitive – The purchase time-line is as follows. You go into contract and the clock starts. Your loan officer orders the appraisal, gets all the signed disclosures for the property, requests the preliminary title report and a copy of the fully executed purchase contract. Our wholesalers want a complete package to look at your file. The appraisal can be anywhere from 3-5 days, preliminary title report depends solely on the title company (I have dealt with companies in Philadelphia), Fully Executed Contract which can take time if the property is bank owned 3-15 days I have waited and all of this prior to submitting the loan to underwriting. Once we have all the documentation we can submit to underwriting which can be 3-9 days to underwrite. Business Days but the weekends count on the escrow. Once the file is approved there are generally a few conditions to meet and to be reviewed once they are obtained can be 2-4 days. When they are cleared and we are able to order your loan documents this is a 2-3 day job. Then we sign and the package is returned to be reviewed for funding. The funding process is 2-3 days. So if you add up the days on the short end a perfect process can take up to 12 business days with no hold up at all. This would include 2-3 weekends at 6days and we close the escrow in 20 calender days. On the long end 34 business days and 4 weekends would be a 42 day escrow.

In summary, it would require a group effort to survive your 30 day escrow. Note that we all have the same goal in mind. Home-ownership for you as the client is our goal and what we do best. I look forward to working with all of you in the years to come.