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7 reasons why it pays to do business with Ross Altman, a mortgage broker!No-Point No-Fee Home Financing Advantage! Maybe you are thinking of refinancing but you think rates are going to decline some more this year. What should you do? Suppose you have an $250,000 adjustable mortgage with a lifetime cap of 10%; your monthly payment can go to $2,193. Your current adjustable rate is 7.5%, the monthly payment is $1,748 and may go to 8.5% during the next year, your payment will increase to $1,922. The No-Point No-Fee Advantage: If you can refinance your home @ 7.875% payment of $1,812 fixed for 7 years you can avoid the risk associated with an adjustable and if rates fall you can refinance once again. Why? By not paying the loan points and closing costs out of your pocket you have the financial flexibility to refinance once again if interest rates continue to go down. Your new rate of 7.875% cannot go any higher for 7 years but if rates fall to, say, 7.5% or 7% you can refinance again & again and continue to lower your monthly payments without spending anything. The No-Point, No-Fee loan program is a quirk which solely favors the borrower in a declining rate market. This is an opportunity to actually "get something for nothing". IRS 4506T and 8821 are forms which allow the lender to receive an electronic abstract of your tax returns. In this day of scanners, laser printers, and tax preparation software it is easy to prepare a set of "phony" tax returns to submit to the lender. This form's purpose is to keep everyone honest. If you give me tax returns they better be the same ones you sent IRS. You will not get a loan if you're unwilling to sign this form. This is not open for discussion. Please understand that this does not mean that any information is being provided to IRS. The information comes from IRS. We always attempt to do "alternate documentation". For Salaried Borrowers: For Self-employed Borrowers: In either case if you own other residential real estate which you rent you may need to present lease agreements and I always need your 1040s for the past 2 years. If your tax returns are "on extension" I need a copy of the request for extension. If this is a purchase transaction I need a fully executed copy (signed by both parties) of the sales contract. FICO scores are numeric representations of your credit profile. The higher the FICO score the better credit risk you are. FICO is a product of Fair Isaac Company. These have been around for several years but started to be used in the mortgage lending business in 1995 for the purpose of keeping down the expense associated with Home Equity loans. You needed a certain minimum score to get such a loan. FHLMC and FNMA both insist on a FICO score on your credit report. Presumably, you can be denied a mortgage loan if your score is too low. People will be unhappy as a result and our elected officials
will find a new cause to protect us from. You can get a home with as little as 5% down payment . If your down payment is less than 20% of the purchase price, or 20% of the appraisal for a refinance you will need Private Insurance (PMI). The down payment must be well-documented. That is, you must show, for example, bank statements proving that you have had the money for at least 2 months. If the source of the down payment is a gift from a relative you will need: The purpose of all this is to make sure that the down payment is not a loan and most especially not coming from the seller.
Why do interest rates go up and down all the time? Because lenders pool loans into securities and then sell them in "the secondary market" they are competing with the entire pool of worldwide investment opportunities. Any inflationary news translates into smaller values for fixed-rate securities and necessitates a rise in mortgage interest rates. Thus, people in the mortgage business are hoping for lousy economic news which translates into little or no inflation and low mortgage interest rates. Why should I do business with Ross Altman? My rates are posted. Alternatively, you can pick up the phone and start calling lenders or brokers. Believe it or not, people sometimes quote you a "lowball" rate to attract your business. If you call enough people and decide to go with the lowest quote you may have chosen to do business with the biggest liar. Their idea is to quote an unrealistically low rate, get your application, and then either hope rates fall or explain to you that "rates went up". I make my rates public. I can't be quoting you, a prospective client, a lower rate than I am getting my clients whose rates I am locking. I feel that this is one of the problems of doing business on the Net. Private Mortgage Insurance (PMI) is needed on all loans where the loan-to-value (the loan amount divided by the value of the property) exceeds 80%. (There are some examples of "self-insured" loans where the rate is increased and there is no formal PMI but you pay one way or another.) The mortgage insurance premium depends on the loan-to-value ratio. For example: 80.01%-85.00%, 85.01% to 90.00% and 90.01% to 95.00% each step costing more. The mortgage insurance also depends on the loan amount and the type of loan. Adjustable rate loans have higher premiums than fixed rate loans. At the present time you can choose between monthly and annual premiums. The PMI is given by a different party than the lender. Your lender will send a copy of your loan application package to the PMI company for their approval. Among the loan documents you will sign at closing is a PMI agreement. Your lender will "impound" the PMI payment along with your principal and interest. It is usual that when your loan-to-value equals or exceeds 80.1% your property tax and insurance is also impounded. PMI policies usually have "escape" clauses describing under what conditions you can stop paying PMI. It is necessary that you read the PMI policy to determine this. Make no assumptions. Pre qualifying is a process whereby a loan officer takes information about you, either over the telephone or face-to-face and indicates how big a loan of a particular type you will qualify for. The lender would then give you a "pre-qualifying letter" which is of considerable value in dealing with a Realtor or a potential seller. Realtors and sellers are interested in dealing with people whom they know to be able to get the loan necessary to close the deal.
Pre-approval is a step beyond pre qualifying. In a pre approval I send the credit part of the loan package to the lender and get you approved for a certain type of loan with a particular lender beforeĀ you have found or made an offer on a property. With a pre approval you can close the loan faster and often will find your offer more acceptable to the seller. Sometimes sellers are anxious and will take somewhat less in price from someone who can close quickly. The rates you see on this web site are always quoted (unless otherwise noted) for 30 day rate locks. The interest rate on your loan is not set until I fax a "Rate Lock" form to the lender and receive confirmation that they have received it. The loan must fund before the "lock expiration" date or you can lose your rate lock. When I am locking your rate and discussing the lock expiration date it is important that both borrowers be available to sign the documents. You must tell me of your vacation and travel plans. If one borrower will be out of town I can have a "specific power of attorney" prepared so that the other person may sign for both. You can lock your rate before your loan is approved, you can even lock your rate before your loan is submitted. You can get a 45 and 60 day rate lock for an extra minimal charge. It must be noted that the cost for extended locks can vary significantly with the volatility of the market. When rates are volatile long term locks are more expensive. Long-term locks You can lock rates in (on purchases) for a long period. Here is an example of long term locks:
You should assume that your loan will be sold. The good thing about this is that the marketability of pools of loans as "Mortgage Backed Securities" has led to lower rates. The annoying thing is that your loan may get sold a couple of times in the first year and you have to keep track of whom you have to pay. This is an inconvenience, particularly since they may be in another state and time zone. But it is an inconvenience that we all put up with for the sake of lower rates. As part of the loan documents you will be asked to sign a form granting recognition to the fact that your loan may be sold. You will also be provided with a form from the lender indicating what percentage of their loans have been resold in recent years. Keep in mind that there is a Federal regulation which gives you the ability to make payments to your old lender for a period of time after your loan is sold. This will protect you from having your payment reported as "late" if you send it to the old lender soon after it is sold. Protect your rights in this regard. What if my lender goes out of business?People sometimes ask: If the lender you find for me goes out of business or becomes insolvent, can I be forced to pay my loan off early? The answer is No, never. If the ownership of your loan is transferred because of failure it is still governed by the original note and deed of trust. Your note cannot be accelerated and your rate cannot be modified as a result of the failure. (This is not true of the savings or CD account you might have with a failed institution. In this situation. the principal may be guaranteed but the interest isn't.)
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