Featured Blog Posts
Why Deals Die
I have seen estimates stating that 29% of deals that go to contract and require a mortgage, don’t close. That number boggles my mind. It means that even after a buyer and seller come to terms on a sale (not an easy feat these days), 3 out of 10 transactions fall apart. What are some of the more common reasons?
- Appraisal issues – In many markets, we are still seeing declining values. Appraisers are in a difficult position, and with so many transactions (including seller’s concessions to assist buyers with closing costs) values aren’t always coming in at sales prices.
- Short Sales not being approved by the current lender – With so many sellers owing more than their home is worth, buyers’ proposals need to be sanctioned by the lender (who will be receiving less than they are owed). Some of the offers are too low, but often, the lender isn’t local and they really don’t know what the property is worth today.
- Bad pre-approvals from the loan officer – Today, loan officers who are not reviewing tax returns, analyzing bank statements, and asking for detailed explanations and documentation on credit blemishes, are truly hurting the customers. Issuing pre-approvals based on the representations of the customer is reckless and a cause for dismay later.
- A lack of transparency – Whether it’s a seller or agent not disclosing property issues, or a buyer trying to sneak things by an underwriter, too many people think they can cut corners. That is not the world we live in anymore. Everything is uncovered. Being honest in the beginning, gives you the best chance to overcome obstacles.
It is clear by the numbers that closing loans can be more difficult today. However, with proper planning and integrity, many of the challenges can be dealt with early and successfully. Agents documenting values of the homes, loan officers doing complete reviews of the loan profile up-front, and everyone telling the truth helps get deals to a successful conclusion and avoids horror stories.
Protect Your Home From Water Damage
April showers are just around the corner so it’s time to protect your home from the water. Caulking can be challenging the first time you try it but you will quickly get the hang of it. By caulking the areas around your doors and windows at least once per year you will protect your home from water damage. To get started you will need the following tools:
- Putty knife
- Tube of caulk
- Caulking gun
1. Start by using a putty knife to scrape the joint where the window frame and wall join to remove any old caulk or dirt.
2. if you have a wire brush, go over the area you just cleaned. This will help the caulk adhere.
3. Grab your caulk gun and open up the end to insert the caulk tube into the gun. Cut a small diagonal hole at the end of the tube, using a razor knife or utility scissors.
4. Use a nail and push it into the opening you just cut to break the seal (if it isn’t broken). Squeeze the caulk gun trigger until caulk starts to come out through the tip. Press the release latch at the other end to stop the flow of caulk.
5. Set the flat part of the tip at the end of the window frame where it meets the wall. Squeeze the trigger slowly, pulling the caulk gun along the joint, making a thin, flat, even line of caulk. Don’t stop moving the gun as you lay the caulk. Press the release latch when you get to the end of the line to stop the flow of caulk.
6. Repeat for each area around the window, everywhere that two different materials meet, whether there is a gap or not. Immediately wipe up any extra caulk with a damp cloth. Let the caulk set overnight. You can also use you finger or a tool to smooth out the caulk and ensure all gaps are covered.
What Value Does Your Loan Officer Add?
For the longest time, I have listened to other loan officers talk about why people should do business with them; and 95% of the time their presentations boil down to three things – price, product, and service. On the pricing front, they talk about low interest rates and/or closing costs; on the product side, they position themselves as experts in a particular loan program (like a 203K or reverse mortgage); and on the
service side, they discuss turnaround
time or how available they are.
Let me just say that, in today’s marketplace, virtually every lender (and therefore, every loan officer) has very similar pricing, pretty much all the same products, and service is difficult to prove until you give them a loan to work on. My point being is that the changing lending landscape (tougher underwriting guidelines, loan officer licensing, stricter appraisals, and such) has eliminated virtually 70% of loan officers in America. The remaining people have been vetted and represent a very high quality group of professionals. (Not that there aren’t always a few bad apples, but there truly are very few.)
So, when borrowers shop for loans on the old “price/product/service model”, how does a consumer differentiate between loan officers?
- Ask for referrals – If you have a friend, co-worker, or family member who had a good lending experience, ask who they used. Talk to people who deal with multiple lenders (real estate agents, attorneys, accountants, etc.) and leverage their comparative experience into making good choices. Loan officers who earn referrals typically go beyond price/product/service.
- Seek out a mortgage advisor – Even today, with limited loan programs, there are many factors to consider when choosing the right mortgage. Your future income, the length of time you expect to be in the home, and your risk tolerance should be discussed before ruling out adjustable rate mortgages, for example.
- Look for transparency – Demand a lender who freely and competently discusses rates and likely rate movements. Don’t buy into the idea that rates are conjured up in a mysterious way. Rates are derived by activities in the bond market and your loan officer should be able to explain, in layman’s terms, the factors that affect rates and upcoming events and economic reports, as well as, the most likely impact they will have.
- Accessibility of information – Are you looking for printed materials and/or videos to guide you through the process? How about online workshops or home buying seminars?
- Seek out a resource – You may need other professionals when buying a home (from insurance people, to home improvement people, to legal help). A good loan officer has a network of high quality referral partners to help you.
Many of the criteria for choosing a loan officer are less tangible than the old “price/product/service model”, but frankly, they may prove more valuable over time. Happy searching!
