Loan Officer Consultant

This is a very popular subject where ever you may live. I use this as a sales tool and it helps sometimes. If I can save someone an extra $150.00 per month doing a rate and term refinance that may get blown off by some customers but now they see that as an extra few tanks of gas!!

I know this may seem trivial but it works. Keep this in mind because I deal with FHA for about 95% of my total loan volume for the past several years I see folks that have real need to save money.

The majority of them are very thankful to save that money and not being stuck in a sub prime loan even though that may be what they had before we spoke. I wanted talk about the gas prices with you guys/gals because I feel if you work it right it will help you connect with your clients and it may even give you a reason to call some of your past clients.

Stay tuned for my next update and we will continue to explore more opportunities with FHA and how to help close those deals!! Here is what I do when I can show my clients extra savings.

First find out what it is that they are looking ot achieve in this refinance. Most likely it will be savings or something of that nature. Current events if brought up in innocent conversation could spark some kind of response that you can work with as a sales tool to better your chances to close that loan.

My example above about the gas prices has been and will continue to be a big attention grabber for a long time. Well if I can show them how to save an extra $150.00 each month or more that is just one more angle I can work to show its worth to them.

Remember it’s you and them and most times it’s over the phone you have to find a way to be professional but create a connection between the two of you that will allow you to stick out in their head especially if they are shopping.

Who would you go with someone that is connecting with you on your needs and helping you solve problems that involve their bottom line or some rate quote from a huge company that is trying to meet their quota and has no time to build that all important word “rapport”.

When buying a home, there are two stages in the home loan approval process.

Stage 1 starts when a home buyer submits a mortgage application to his loan officer for a pre-approval.

A pre-approval is a “walk-through” mortgage approval that says — at a given purchase price and down payment amount — the home loan application will very likely be approved.

Stage 1 ends when the buyer signs a purchase contract on a home. At this point, the “walk-through” approval is useless because the buyer now needs a real home loan approval from an underwriter and not a loan officer.

Thus begins Stage 2. During the second phase of the approval process, a mortgage underwriter is reviewing income, assets, credit, job history, and other items, too; the underwriters job is to make sure that the buyer meets the bank’s criteria for lending.

If the loan officer did his job in Stage 1, Stage 2 is just a formality. And most times, it all goes according to plan.

Occasionally, though, a home buyer sabotages his own mortgage approval by inadvertently changing his “risk profile”. It doesn’t happen on purpose, of course — it just happens.

So, consider this a quick primer of what not to do while you’re between Stage 1 and the completion of Stage 2 of the home loan approval process. Following these pointers will help keep the risk profile consistent.

1. Don’t buy a new car (or take on a larger lease payment)
2. Don’t quit your job or change industries (and certainly don’t switch to a heavily commissioned role)
3. Don’t transfer large sums of money into or out from your bank accounts (and remember that “large” is relative)
4. Don’t miss a payment to a creditor (even if you don’t think you owe it)
5. Don’t open a new credit card (even if you’re getting 10% off your new bedding)
6. Don’t accept a cash gift without talking to your loan officer first (because there’s rules on how to accept them)

There’s other items, too, but this a good start.

We need to educate our borrowers on this stuff and I don’t care if it is a purchase or refinance loan. If we are educating our clients of the above items we are letting them know how to better there experience and make the process easier on them too.

Did you know that with a FHA loan you can lend up to 95% of the houses value if you need to go cash out and up to 97.75% rate and term. WOW!!! So here is an example for you to think about. If you have a client 15 months ago with a 580 credit score and no late payments on their mortgage you had a few options to go 95% loan to value cash out. RIGHT? Well, it’s the first part of April 08’ that does not exist anymore and even if there is a few out there what kind of rate are they going to charge? Ouch!! My guess is the rate is going to be ugly and the fees may be worse.

What if you could give your client a 6% and still make some money for yourself and get 5 referrals instead of charging them 8.50% or worse. Last week I had a reader send me an email and ask me if I felt guilty putting someone in a loan that had mortgage insurance and 1.5% up front MI funded in the loan. I laughed for a second and said let me guess you are one of those guys that sells the benefits of a higher rate vs. MI right. The guy said you bet. I said what is the savings to your client with the 8.50% vs. my 6% on a $150,000.00 dollar loan in 12 months, 24, 36, 48 and at 60 months?

Here is the answer because he couldn’t give it to me. The up front MI is $2,250.00 and the monthly MI is about $63.44 per month so let’s break this down. The monthly payment for principle and interest and MI is $976.26 vs. the higher rate of $1153.37 which is a difference of $177.11 which would take you about 12 months to make it up and then to be better off with the FHA loan. Then you are showing a savings of about $2135.32 per year and that is if you don’t invest the difference or reapply it back toward the principle. Then the savings really start to grow!! Now keep this in mind if you were selling in a price sensitive market like we are right now would you rather sell a 8.50% or 6%? Which do you think your client is going to feel more comfortable with? Not to mention it is a 30 year fixed.

I wanted to finish up with a little history on the Federal Housing Administration. Last week I was telling you when FHA started and gave you some insight into how they began and a few of their major achievements. The Federal Housing Administration has closed millions and millions of loans both residential and multi-family and the only thing that has really changed over the past 70 years is the ease of underwriting. There are several different types of FHA programs for us to use to help people with their financing needs. There are programs for borrowers if they are looking to purchase, refinance or even buy a home that needs improvement. There are a lot of myths about FHA loans and how they are hard to work with and get folks approved. I have several case studies where I have personally done the loans and they would blow you away.As many of you may or may not know, FHA was there for the American people when over 2 million construction workers lost their jobs in the 1930’s and 1940’s. Now, FHA is doing the same thing, helping the struggling house market. Weird if you think about it several years later we, the American people, need a shot to the arm and a little break to get us by for now.

I have several different topics I want to go over and explore. Some of the upcoming posts will include case studies of my FHA deals, current myths of working FHA loans, and that is just to get us started!! Thanks again for reading and let me know what topics you wish to hear about in the future.

P.S. Make sure you are reading Raymond Denton’s articles too. Reverse mortgages are big and I only see them getting bigger and bigger over the next several years!!

The Federal Housing Administration was developed back in 1934 and did not become part of the housing of urban development until 1965 and at the time the housing market was flat as could be. Hundreds of thousands of people were without work and having to take jobs for less money which made home ownership seemingly impossible before FHA that is. For you folks that feel like it is hard to get approved for a loan today check this out. Most of these loans were balloon payments after a short 3-5 years and max of about 50% loan to value. Before this folks were mainly renters as a matter of fact only 4 out of every 10 households owned their homes.In the year of 1940 FHA had a main focus and that was to help returning veterans coming home from the war get into homes. In the 1950s, 1960s and 1970s, the FHA helped to spark the production of millions of units of privately-owned apartments for elderly, handicapped and lower income Americans. When soaring inflation and energy costs threatened the survival of thousands of private apartment buildings in the 1970s, FHA’s emergency financing kept cash-strapped properties afloat. The main reason I want to start with this was to give all you folks an idea that FHA is here now just as it was 75 years ago!! The main reason why I wanted take a few minutes and give you some history to FHA is for your to truly appreciate what I do for people you should understand that this loan has weathered many housing market storms over the past 75 years and it will continue to do so but at times underwriting guidelines get strict and sometimes loosen up like right now. So for you folks that feel like you can’t be helped you may want to call or email me instead of taking upon yourself and guessing.