Ingrid B. Quinn

NMLS ID #211652 Arizona, Loan Consultant


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What Kind of Lender Are You Using?

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When looking to buy a home, one of the most important things to think about is what type of lender you are going to be working with. You may be surprised by how many different options there are.
Banks, large and small: Due to their size, banks have a tendency to be a bit slower. In general, I have seen the banks take weeks to go through a process that takes other lenders days. There may be the chance that you are working with a Private Banking Associate who may get your file through a bit faster. On the negative side, trying to get a loan through a bank’s branch network, 1-800# call center or a low to middle producing loan officer can be painful.
There can also be a challenge with having the appraisal done through a bank’s system. Due to changes enacted by the CFPB, all lenders must use a 3rd party system of ordering appraisals. Banks use their own Appraisal Management Company (AMC). I equate ordering an appraisal to pulling a number out of a Bingo basket. It is random and the pool of appraisers is quite large. Obtaining a mortgage through a bank tends to be a conveyer belt process, possibly in another state or region. This can cause the loan process to take longer as well as be a bit more complex.

Credit Unions: Credit unions can go either way. From life experience a credit union’s functionality and speed are greatly affected by the loyalty you show. Credit unions also draw from their own AMC, and tend to be similar to a big bank. When it comes down to it Credit Unions are a 50/50 shot on whether you are going to have a great experience or a bad one.

Mortgage Brokers: Mortgage brokerage firms seem to be mostly about the individual broker. This can be a good thing when it comes time to shop rates for the client. If you are thinking of working with a Mortgage Broker, you will want to meet them in person and get to know their work ethic to see what to expect during your transaction. There are some downsides such as, appraisal ordering is subject to the AMC of the institution the broker chooses to go to. Some of these lenders broker to big banks, small banks, wholesale entities, insurance companies, credit unions, private banks and more. Guaranteed before your first payment is due the loan, will have been transferred and may do so a number of times throughout the life of the loan. The broker has very little negotiation power during the underwriting process as far as any hiccups on the file.

Mortgage Bankers: A good mortgage banking firm is a worthwhile contact right now. A mortgage banker is usually set up to underwrite and close loans in-house, which means faster turn times, more control and the underwriting staff, closers, funders personally know the people who are handling your loan . Some mortgage bankers even have their own AMC, populated by a smaller pool of self selected appraisers they know well, which can make for the best results for a tight appraisal situation you may be worried about. Most Mortgage Bankers also have constant contact with your loan and have the ability to check status and in turn give you immediate feedback and updates throughout the process. This keeps the control with your Mortgage Banker and allows you to have more input into the process. They are also very likely to service the loan after it closes, so you have a loan life partner in your loan officer.

Online lenders: When looking at online lenders the best way to think of it is, would you want to place the largest purchase in your life in the hands of a nameless, faceless entity? Online lenders are big, with no knowledge of the local market and are subject to large AMC’s. From my experience, they tend to be slow and cause frustration. If a client wants to take a leap of faith and purchase or refinance with an online lender, I am honestly going to try and talk them out of it. I personally would not risk going to an online lender.


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How A Refinance Can Change Your Life

I continue to get calls for refinancing. A lot of people who were eligible for HARP (Home Affordable Refinance Program) refinancing have already done so. Hopefully, if they haven’t yet they will do so and take advantage of what I believe is a great opportunity for negative equity clients. But, there is renewed interest in other refinance programs because home values have rebounded in many markets.

Homeowners who have equity in their homes can do a regular refinance without HARP and lower their rate or they can get out of their FHA Mortgage Insurance Premiums to possible lower conventional premiums or they are opting to reduce the term of their mortgage.

A client should consider what their goal is with a refinance:

• Do they need to lower monthly payments and/or interest rate?
• How long will they be in the home?
• What are their long term wealth management/ equity position goals?
• What are the tax benefits or ramifications of a refinance?
• Do they want to build equity and lower rate?

An example of an analysis between staying with a current 30 year fixed loan Vs. a 15 year or 30 year refinance is outlined below. Please be advised this is not a rate quote. :
Say for example, you have a 30 year loan taken out for $150,000 with a rate of 5.25% 5 years ago. You have a balance now of about $140,000. The loan over 30 years would cost $150,000 in interest charges when finally paid back. The monthly P& I payment is $828 a month.

The same loan refinanced today with a $140,000 loan amount for a 15 year loan at 3% will have total interest paid of $36,000 over the term and the payment will only rise by $139 a month. HUGE savings!

The other alternative is to take the $140,000 and refinance for 30 years again at a rate of 4%. The loan will cost over the 30 years $102,000 in interest charge and the payment will drop by $160.

Wouldn’t you rather have the extra $100,000 in another form of investment or have your home paid off when you retire or when the kids go to college? Rumor has it 15 year loans have payments that are not manageable. It is not true. Speak to a mortgage professional about your options and don’t completely rule out a 15 year mortgage. It can change your life. For more information or to comment please contact me at Ingrid.Quinn@cobaltmortgage or visit my website at http://www.ScottsdaleMortgageExpert.com.