Friday, January 24, 2014

Nooks and Crannies

We all know that "Nooks and Crannies" denotes hiding places.  The places in the home where dust mites, spiders and nic-nacs go to rest.  We also know that discovering items in "nooks and crannies" can sometimes be unpleasant - because let's face it, who wants to clean dust, find spiders, or search for that missing nic-nac that you just "know was on the table".

As far as mortgages are concerned - let's get one thing ready to look in the "nooks and crannies".  Be ready to provide information, then more information and then more information.  We all could stick our head in the sand and proverbially ride out the scrutiny with which files are under...but that wouldn't serve the mortgage industry or you - our clients.  The truth is that getting a mortgage can sometimes feel like we are searching through your own "nooks and crannies" just to be able to own a home.  And while you - our clients may feel this way, we must work together so that you understand that it really is in your best interest. 

Why? Because...

  • We don't want the most important transaction that a person may ever make be one that causes them undue stress or harm.
  • We don't want the client to live in a home and then not be able to feed or provide for their families.
  • We don't want the client to cringe every time they write the check or have it auto-drafted from their accounts.
  • We don't want the client to regret the home they purchased to protect their family.

Statistics show that owning a home contributes to higher self worth in the homeowner.  It does this because it's stable, predictable and comforting to have a place called "home".  As a lender, we aren't in the business of searching through your "nooks and crannies" because we have some vendetta against you.  We aren't taking detailed information in order to make you feel as though you aren't telling us the truth.  We are simply in the business of ensuring the success of your mortgage and home purchase.

  • We want our clients to take pride in the fact that they can pay for their home and provide for their families.
  • We want our clients to be clients for life, because they know that we looked out for them throughout the entire process.
  • We want our clients to rest easy that this purchase is the best decision for them at the time they make it.
So yes, we search the "nooks and crannies" and yes we scrutinize the files...but we do it - most importantly - to make sure that you - our clients - are not just buying a piece of property.  We believe the purchase is your HOME; where you will raise your family, eat dinner, and enjoy many holidays for years to come. 

Make sure you have a lender that knows what's on the line and takes care of you and your needs with great caution.  You deserve it!

Friday, January 10, 2014

State of the Mortgage Market - QM (Qualified Mortgage) and ATR (Ability to Repay)

QM (Qualified Mortgage) and ATR (Ability to Repay ) have arrived.  Effective today, January 10th, 2014 - the Dodd Frank Act piece of legislation on mortgage reform arrives and with it comes the new rules that will have an impact on mortgages moving forward.

Some of the main changes that have come down:
  • Most mortgage will need to meet the criteria as follows:
    • Max DTI ratio of 43%
    • ARM loans must be 5 years in length or more
    • No Interest Only loans
    • No Fees in excess of 3% of the loan amount
    • Minimum of 2 years Required Income information (Tax Returns, etc.)
Here is a great article that explains the impact to the consumer:

Some of the highlights:
  1. On ARM Loans - must qualify at the highest rate the ARM can adjust to
  2. No loan terms longer than 30 Years
  3. No Balloon Payments - where a large lump amount is due at the very end of the loan or during the loan period.
Overall, the market has been moving towards these items over the last few years - so while there will be an impact - over time, these moves are best for the mortgage industry.  The idea behind lending or financing a home should never be to over-extend oneself to the point where they find themselves unable to pay their mortgage (due to a program and notwithstanding an unforseeable event such as death, long term loss in job, etc.).

Change is difficult, but some change is necessary.  For the safey of the consumer and for the betterment of our industry, these rules have been put in place. 

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