Northstone Mortgage Blog

There is a web site that came to my attention today that has quite an interesting premise. It is called close your own loan.com tm and their tag line is “ We've eliminated the loan officer, you keep his commission!tm “ their website says “our online mortgage system allows you to compare and lock your new fixed interest rate and payment with no upfront costs in a sales pressure free, education-based environment. Simply choose your new mortgage rate, complete the secure online mortgage application and will handle the rest!" “No high commission salespeople= lower cost equals= lower rates”

Okay, so I think I'll bite. Who knows maybe I'm out of a job. I go to the website and price out a basic 30 year fixed loan for conforming loan amount of $417,000 for a borrower with a 740 credit score. Wow what a surprise. Their rate on this product is one full point higher than the base rate that we offer our clients. That translates to a whopping difference of $4753.36 Now I am not saying we'll beat them this bad every day, but that's how bad we beat them today. In my mind this gives new meaning to buyer beware. When you read the website it all sounds pretty good, and it is a very attractive and well done interface. But ask yourself if you're going to do all the work; shouldn't you really have that savings? But wait there's more, they offer a very interesting guarantee. “$1000 best rate guarantee. We have no high commission loan officers to talk you into paying too high of an interest rate, so the pressure is on us to deliver to you the best rate available and let the numbers sell themselves.” They go on to say that if you find a better rate or fees from another legitimate lender within 30 days they will refund $1000 that means they pocket the difference of the $3753.36 not a bad job, if you can get it. I suppose one way to look at it is Northstone Mortgage is just not charging enough. But the model we are using is working for us. So if you'd like to save serious money give us a call or e-mail.

I think there is a certain perceived assumption of saving money based on the do-it-yourself model but with their pricing the savings just are not there. At Northstone Mortgage we are always going to put customer interest ahead of self interest and never boast about what great savings you can have if the savings simply is not there. The site touts the benefits of the online application etc.. realize that is nothing new in this industry by today’s standard they should deliver not only a seamless online interface but a totally “green” process as well which, by the way, effective January 2009 Northstone Mortgage has done, but that's another story.

Problem: Your borrower has been having problems getting approved for a home loan. He does not have enough credit for a traditional credit report to generate a credit score with any of the three approved credit reporting companies. He has also been having problems qualifying with just the income from his job. His mother is living with his family and she insists on paying him room and board, he wants to know if there is a loan that will allow him to use the money his mother pays him to qualify for his new home?

Solution: The MyCommunityMortgage® loan program targets low to moderate income borrowers ($92,880/yr King/Sno/Pierce Counties) that need certain underwriting flexibilities such as Nontraditional credit reports, Boarder Income and higher LTV's to qualify for a home loan. It is a perfect fit for first-time homebuyers and allows the use of subsidized second mortgages with no additional price hit!

Q: It looks like my husband and I will have no other option but to file bankruptcy. One of our biggest concerns is that we have been told that the bankruptcy will destroy our credit and we will not be able to buy a home in the future. Is this true?

Name withheld by request.

A: Good question and I'm glad you asked. One of the biggest problems we're seeing with the difficult economy is many people losing their homes and in some instances, forced to file bankruptcy. I often hear concern from people regarding their future options after bankruptcy and I want to reassure you that this is a manageable problem.

Fannie Mae in a recent bulletin to mortgage brokers announced changes to guidelines regarding reestablishing credit following bankruptcy. For all bankruptcy actions, the elapsed time period to reestablish credit will now be measured from the bankruptcy discharge or dismissal date. For all bankruptcy cases, other than Chapter 13 cases, the time period to reestablish credit is four years. For Chapter 13 cases, a distinction is made between Chapter 13 bankruptcies that were discharged and those that were dismissed. The updated policy recognizes the fact that borrowers have reestablished credit through the successful completion of a Chapter 13 plan and subsequent discharge by requiring only a two-year time period to elapse. A borrower who was unable to complete the Chapter 13 plan and received a dismissal, however, will be held to a four-year time period for reestablishing credit. The short answer is that it will take two to four years following completion of the bankruptcy to reestablish credit and obtain mortgage financing from Fannie Mae to purchase a home.

Brian Leavitt

Broker

Northstone Real Estate Inc

Something I am hearing over and over on the street and in the market place is the question " Is money available for home loans?"  The answer is a resounding YES.  To hear the news about the credit crunch you would think that home loans simply are not available but this not the case. 

For borrowers with good credit very little has changed.  In many markets prices are declining so appraisals have been a little tougher but other than tightening up on appraisals it is business as usual.  In fact for well qualified borrowers with excellent credit and relatively low loan to value ratios (LTV), jumbo rates have never been better.  At this writing the rate for a 5/1 ARM up to $3,000,000 is 5.125% with an APR of 5.22%.

For borrowers with poor credit there are not too many options but loans are available if they have a low LTV.

As far as the real estate market in general it is a great time to buy because right now most every real estate market in our service area is having a "sale".

If you would like a detailed analysis of loans available to you and a professional recommendation of which mortgage products are the best fit for your real estate portfolio call one of our loan consultants anytime at:       425-837-4700 or email broker@northstone.net.

By Brian Leavitt, Broker, Northstone Mortgage

There is a blog post appearing on Seattle Bubble titled “Ever met someone who likes to play with live grenades? Here’s somebody: Agents Who Originate Loans”

It seems some agents have had problems with real estate agent / LO’s. (loan originators) The story goes on and talks about the law suit that many of you have seen where the buyer filed suit against their agent alleging that the agent mislead the buyer on price. The story goes on and says that the agent also was the loan originator on the transaction. The following is my response to this post in light of some of the negative comments from agents:

Like every service provider out there, there are good and bad. I read these comments and can relate to these experiences because of "issues" on my own listings where an unethical real estate agent has also worked as the loan originator (LO) I operate both a real estate company and a mortgage company. We always put client interest ahead of our own interest and do not engage in ANY practice that is not to the benefit of our client. We offer our service as loan originator to our clients when it is going to save them money, result in a faster and smoother transaction and improve the quality of the overall service that we provide. One of the biggest challenges we have is overcoming some of the objections created by the dishonest and unethical LO's (and real estate agents) in the industry. As far as "playing with live grenades" there is no "grenade" for the honest agent who knows the mortgage business cold and knows when to refer a borrower elsewhere, for instance EVERY TIME it is in the borrower’s best interest. The reason we created the mortgage company in the first place was because of inconsistent, overpriced, apathetic service. Since 1996 we have originated loans on over 70% of our real estate sales and on average save our borrower at least on third of what they would pay elsewhere. We also believe that true authority withstands questioning and will gladly provide an approval by an independent underwriter when our offers are presented, and yes, we underwrite and fund our own loans. I am sorry that many of you have had bad experiences with agent / LO's but please consider the source rather then painting all with the same brush.

What are YOUR experiences?