Sunday, May 27, 2012

What does an Appraiser Look for in Your House?

What does an Appraiser Look for in Your House?
The appraiser looks at sq. footage, basic amenities, and then finds comparable's in your neighborhood.

Ideally they are looking for a house just like yours within a few blocks that has sold within the last month. Now the odds of that are slim unless you live in a HUD development. But in general you want to replace items in your home that are older than the typical life expectancies, windows, furnace, water heater, A/C, roof, siding, other appliances, cabinets, counter tops, plumbing fixtures, older than 15-20 years. Carpet, flooring, paint, ceiling texture older than 10 years. Landscaping should be fresh and well maintained. These should all be pointed out to the appraiser. 

The biggest things you can do is add finished Sq. footage, finish the basement, add on, add a bathroom, add a gas fireplace, add garage space 3 stalls is ideal, (increase the amenities). As a former home flipper, you want to buy the ugliest house on the neighborhood and turn it into the 2nd-4th best in the neighborhood. Not first best because the other homes bring your value down, but above average so yours will sell fast. 

As most realtors will tell you neighborhood need curb appeal. Buyers should want to look at the inside, not be turned off from the street. Additionally I would look at your market area, house prices in general are on the decline, now is the time to make improvements because contractors are looking for work and giving deals. You want to be fairly confident you live in an area where the housing market will recover. Will the job market recover? Is a long commute necessary? Gas prices are bringing buyers back to the city/inner suburbs.

Wednesday, May 16, 2012

What Is the Job of a Loan Officer?

What Is the Job of a Loan Officer? 
If you have ever thought about purchasing a home, one of the main things that may go through your mind is “what is the job of a loan officer?” 

A loan officer usually works for a bank or a mortgage company that specializes in mortgage loans. 

A loan officer is a financial liaison that helps people and businesses get the funding that they need from a lender. They usually specialize in either commercial or individual mortgage loans, although they can also handle other types of credit such as personal loans. 

A loan officer will typically spend some of his day searching for potential clients to service via making cold calls. They may also use a list to work from in order to make contact with potential customers. 

Once a loan officer has secured a client, most of the time, people think of loan officers as their personal liaison between a commercial or home loan lender and the borrower. The loan officer may have a group of financial representatives or banks and lenders that they can reach out to when trying to seal the deal and secure a loan for borrowers. 

The core job of a loan officer is to help borrowers get the loan that they need, whether it is for a home or business. A loan officer may also: 

  • Pre-qualify buyers for loans in certain instances 
  • Help borrowers complete their applications 
  • Run credit checks 
  • Advise clients on how they can get the loan they need 

Qualifications of a Loan Officer
Usually you will find that a loan officer has a Bachelors degree in either business, finance or economics. Some may even have banking experience. On occasion you may even find a loan officer who has a solid background in mathematics. 

The daily duties of a loan officer vary and include: 

  • Constant communication with the client and the lenders either via the telephone or over the Internet Traveling to the client or lender 
  • Visiting customers 
  • Drafting paperwork 
  • Perform online credit checks 
  • Draft correspondence 

Having a job as a loan officer will definitely require an ambitious mindset, a penchant for hard work, determination, and the ability to thrive in all environments. There will be times when the pressure is high as well as times where the work day is slow. 

As a loan officer you have to have that special something that makes people want to say yes to you. It is important to be a good salesperson, because for every 100 “nos” you will get at least one “yes.” Loan officers live by the law of averages and make every effort to get their customers the loans necessary for their needs. You will find that most loan officers are eager and determined to get their jobs done effectively.

Source:  YourDictionary

Loan Officer at Banks and Mortgage Brokers

Loan Officer at Banks and Mortgage Brokers
Loan Officers
We'll give you the average profile of a loan officer working for a mortgage broker. Knowing this may give you an insight on the guy that has your life savings in his/her hands. The average loan officer: 

  • Has no college degree, may never have finished high school. 
  • Makes about $1,500/month (about $500/loan) for which they typically work like dogs. Spends their day getting rejected while looking for business: visiting real estate offices, cold calling customers, going to banks looking for rejected loans, sending out mailers. 
  • Gets viciously yelled at by borrowers, title companies, realtors, builders, underwriters, and his/her boss. This is part of the day, no matter how good a loan officer is. 

Loan Officers are are heavily involved in one of the biggest purchases a person makes in a lifetime, and everything about the deal looms large and frightening for the borrower. Mild mannered people turn in to screaming monsters if anything goes wrong, and there are so many things that can hold up a loan. It's not a fun business, it's stressful, hard work, and it's a good day if no one gets upset with the loan officer. Have a heart for these guys. And also realize that most of them don't respond to yelling, hysterics or threats. It's nothing new to them and will only get you an increase in loan fees as compensation for your abuse or get you terrible service. They're people, too. 

If you have less than perfect credit or a tough situation, the loan officer specializing in these non-conforming loans knows he or she will work harder for this deal and will either: 

a) hope you will be impressed enough to send many referrals in the future, or 

b) charge you more money. 

Guess which one they will usually pick? The loan officer sees an opportunity to make a little extra income. Remember the real costs involved in doing a loan. 

You should keep in mind that if you can't get an 'A' loan, the loan officer may only be able to find a loan for you which is certainly higher in interest rates, and possibly in fees, too. There are special loans for non-conforming situations. 

Especially with tough or non-conforming loans, the loan officer may charge extra points to get the loan through. How much extra is their call (and yours; you can always walk away.) However, overcharging isn't the norm: Loan officers with clients who feel they've been overcharged don't get repeat business, the real money in this industry. Unfortunately, you still need to be careful about the guy who will shaft you. Desperate people can get taken because they'll do anything to get a loan. 

If you think you're being overcharged, shop. Most brokers have access to the same products (meaning they can usually find and buy the same loans as other brokers), so call around and compare interest rates and fees, especially if you're not an 'A' loan. Don't believe the loan officer who tells you that you won't get a loan anywhere else. By shopping around, you can usually reveal who's trying to gouge you. Once you find the interest rate and fees you can live with, fill out an application at the broker's office, and lock the terms of the loan. 

A broker is your only option when: 
  • you have less than perfect credit 
  • are self employed (and can't prove your income) 
  • just switched professions 
  • or have a high debt load
Mortgage brokers can get you a loan when the banks just aren't interested in the hassle. But you will pay more in both fees and interest rates for getting your loan through. 

A bank is the best option if: 
  • you have top notch credit 
  • steady job/work history 
  • low debt loads 
  • are self-employed, but your last 2 years of income tax returns easily prove your income. 
A broker may have competitve rates/fees as compared to a bank, so don't necessarily rule out a broker even if you'd qualify for a bank loan.

Source:  CreditInfoCenter

Mortgage Broker or My Bank - Which One is Better?

Mortgage Broker or My Bank - Which One is Better?
A mortgage broker "buys" loans from a variety of mortgage lenders at a wholesale cost, and sells the loan to another mortgage banker, receiving a commission on the sale.

A banker, gets a loan from your local bank. A banker usually, but not always, has their own money to lend out and makes a profit by collecting loan fees and the interest the customer pays on the loan, called servicing fees. However, most banks package up loans in packets of $1,000,000 dollars or more and sells them to the secondary market, making a commission on the sale. Why? What are interest rates right now, 7 or 8%? The stock market and mutual funds are averaging 15% returns or more. Why have millions of dollars tied up in low return investments?

No matter what people will tell you, your best deals usually are at a bank. I mean the same building where you get your checking and savings accounts, not a mortgage company with the same name as your local bank. This is because there aren't a lot of add-on fees and middlemen who touch your loan and get paid for it. Plus, these guys do a volume business and therefore can cut corners on costs. The employees generally don't get a commission, just an hourly rate, so they aren't looking for ways to charge you extra. (No, that doesn't happen, does it? Yeah, and I have a bridge to sell you, too.) They also may lend out their own money, making money through the servicing of a loan, not in charging origination fees.

One of the reasons that a bank is cheaper: Banks don't give out loans to anyone without 'A' credit, job stability, long-time residence and good income. If you fit their criteria, giving you a loan is practically automatic and follows the same procedure every single time, without extra work or effort on the part of the bank.

As we stated, the banks make money by processing a cookie cutter type of loan. If you don't fit the 'A' profile in job, credit, and income, forget it: why should the loan officer do any extra work if and not be paid for it? Your loan gets pitched in the reject pile automatically. It's not that you're not a good loan risk, but look at it from the loan officer's point of view.

In the banks that do pay commission, a loan may pay a flat $100 commission for every loan. Therefore, why would a loan officer work on a loan that takes the time of two easy loans? He/she would make $100 less for the same work. It's just common sense for them to pitch out a difficult loan.

And the banks that don't pay commission? Are you kidding? Why deal with the stress if you you can just stamp 'reject' on the file? Those rejected files? This is where the mortgage broker comes into play.

Mortgage Brokers 
In the mortgage broker world, you usually pay higher fees/interest rate for getting your loan through. The sharp loan officer can take a look at your application and know in advance how much effort it will be to get your loan through the system. Not every broker handles difficult loans, most prefer handling 'A' clients. Again, it's easier, like the guys working in the banks: they'd rather make a lower commission for less hassle and go for volume.

So why would an 'A' client go to a broker? The reasons are numerous: clients may not have tried the bank, the broker actually has a better deal (it happens) , either in interest or fees, or their realtor recommends them. Usually the broker, if they're good and have been in the business a while, has a regular clientele consisting of real estate agents or referrals by past satisfied customers. Buying a house is very stressful; a competent, hand-holding professional may be a service worth paying for. Keep this is mind, it's one of the things you should consider for when shopping for a loan.

Source:  CreditInfoCenter

Friday, May 4, 2012

Four Big Money Mistakes First Time Homebuyers Make

Four Big Money Mistakes First Time Homebuyers Make
First-time homebuyers almost always make a few mistakes when buying their home. Perhaps they pay too much, choose the wrong type of mortgage or neglect to budget for needed home improvements.

 Working with a trustworthy, experienced lender can help prevent such mistakes. But consumers also need to take responsibility for their budgets and choices.

 "Before buying a home, consumers need to develop a short- and long-term perspective on their purchase," says Michael Harrison, area director for MetLife Home Loans in Southwest Ohio. Following are the four biggest financial mistakes of first-time homebuyers:

Spending the Maximum on Housing
Lenders qualify buyers based on their incomes and debt-to-income ratios without considering how much the borrowers spend on items such as transportation, savings, food and other necessities.

"A lot of first-time buyers are optimistic about the future and excited about buying a home, so they borrow the absolute maximum they can afford instead of allowing themselves wiggle room for a partial loss of income or for future expenses such as children," Harrison says. Financial experts recommend that consumers decide how much they want to spend each month on housing before meeting with a lender. 

"Every buyer should create their own budget and know their limits," says Stephen Adamo, president of Weichert Financial Services in Morris Plains, N.J. Adamo says many first-time homebuyers experience a sizable change in their housing payments. Some new owners may go from $500 per month in rent to a monthly mortgage payment of $2,000, he says. "You need to deal with payment shock," Adamo says.

Not getting pre-qualified early enough
Meeting with a lender for a buyer consultation and pre qualification for a mortgage should be the first step toward homeownership. Yet many first-time homebuyers wait until they are ready to start house hunting before contacting a lender.

 "It's never too early to set up a free buyer consultation with a lender," Adamo says. "Every buyer needs to get pre qualified early enough in the process so that they can make some changes if they need to or correct errors on their credit report." Some buyers may need to spend up to a year saving more money, increasing their incomes or cleaning up their credit before making an offer on a home.

A buyer consultation should include creating long-term financial goals and strategies for buying property, Adamo says.

Misunderstanding the Importance of a High Credit Score
While most consumers know it's important to have a high credit score, not everyone understands how costly a low score can be.

"All mortgage lending is done with a tier of interest rates and terms based on consumer credit scores," Harrison says.
"A credit score of 720 or above will earn you the best rates and can potentially save you thousands of dollars." A score of 680 to 720 can get you good mortgage rates, while a FICO score of 620 is usually about the lowest score to qualify for most loans, Harrison says. Consumers should learn about credit scores the minute they start working, Harrison says.

Websites such as Bankrate provide information about how to improve your credit score. Even after a mortgage approval, consumers must avoid applying for new credit or taking on new debt, Adamo says, because a second credit check is often required before settlement.

Choosing the Wrong Mortgage Product
First-time homebuyers today typically opt for a 30-year fixed-rate mortgage. Their conservatism is a reaction to stories about the dangers of interest-only mortgages and adjustable-rate mortgages. But Harrison says home loan alternatives to a 30-year-fixed sometimes make more sense.

For example, buyers certain they will be relocated by their companies within five years may find a 5/1 ARM "could be a much better mortgage," he says. "There's no reason to pay a premium for a product you don't need like a 30-year loan," Harrison says.

Homebuyers eager to build equity in their homes or who are older and want to live mortgage-free in retirement should consider a 15-year fixed-rate loan or, if they can afford it, even a 10-year mortgage to reach their goals.

Source:  Bankrate

Thursday, May 3, 2012

What's the APR and How is it Calculated?

What's the APR and How is it Calculated?
The term annual percentage rate (APR), also called nominal APR, and the term effective APR, also called EAR, describes the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage loan, credit card, etc.

It is a finance charge expressed as an annual rate. Those terms have formal, legal definitions in some countries or legal jurisdictions, but in general:
  • The nominal APR is the simple-interest rate (for a year). 
  • The effective APR is the fee+compound interest rate (calculated across a year). 
The nominal APR is calculated as: the rate, for a payment period, multiplied by the number of payment periods in a year. However, the exact legal definition of "effective APR", or EAR in short, can vary greatly in each jurisdiction, depending on the type of fees included, such as participation fees, loan origination fees, monthly service charges, or late fees. The effective APR has been called the "mathematically-true" interest rate for each year. The computation for the effective APR, as the fee+compound interest rate, can also vary depending on whether the up-front fees, such as origination or participation fees, are added to the entire amount, or treated as a short-term loan due in the first payment. When start-up fees are paid as first payment(s), the balance due might accrue more interest, as being delayed by the extra payment period(s).

In some areas, the annual percentage rate (APR) is the simplified counterpart to the effective interest rate that the borrower will pay on a loan. When not using the term "effective APR", the use of "APR" is an early term for nominal APR. In many countries and jurisdictions, lenders (such as banks) are required to disclose the "cost" of borrowing in some standardized way as a form of consumer protection. APR is intended to make it easier to compare lenders and loan options. The APR is likely to differ from the "note rate" or "headline rate" advertised by the lender, due to the addition of other fees that may need to be included in the APR. APRs can be found by asking the lender or by reading the appropriate section in the contract.

In the U.S. and the UK, lenders are required to disclose the APR before the loan (or credit application) is finalized (although the definition of "APR" is not the same in the two countries-–see below). Credit card companies can advertise monthly interest rates, but they are required to clearly state the annual percentage rate before an agreement is signed. APR is a term used with regard to deposit accounts as well. However, when dealing with deposit accounts, the annual percentage yield (APY) or annual equivalent rate (AER) is quoted to consumers for comparison purposes.

There are at least three ways of computing effective annual percentage rate: 
  • by compounding the interest rate for each year, without considering fees; 
  • origination fees are added to the balance due, and the total amount is treated as the basis for computing compound interest; 
  • the origination fees are amortized as a short-term loan. This loan is due in the first payment(s), and the unpaid balance is amortized as a second long-term loan. The extra first payment(s) is dedicated to primarily paying origination fees and interest charges on that portion.

What is

What is 
If you are a real estate professional you probably know about the website But for the benefit of those who don’t know what Zillow is, it is a real-estate website which is dedicated to giving its hundreds of users tons of information about almost any property in the United States. 

It helps realtors, buyers and sellers educate themselves and be aware of as many details as possible that have to deal with buying a potential home, or in selling a home. It is for this reason that Zillow is the most popular real estate website and why many people make use of it. 

There are hundreds of real estate sites on the internet. Another site is – a great website that lists homes for sale by realtors from all over the United States. 

This is where comes in because it does a good job in completing or filling in the information holes that leaves. Some states have better Zillow coverage than others. 

Currently in the state of Tennessee, brags of its 80-100% coverage. There is about 67 million homes across the United States that covers. 

The best thing about is it’s Zestimate. Zillow uses data that has been combed from public records to determine the square foot of a home, how many rooms it has and then integrates all of this information with the selling prices of recently sold homes within the area in order to determine the Zestimate of your home. 

But what Zillow cannot do here is to determine the added value of extra features of the home like a recently added jacuzzi or upgraded siding and windows. Zestimate is a little controversial because many realtors feel that the estimate they get is not accurate and may give potential home sellers biased expectations when it comes to the value of their home. 

Another thing about Zillow is you don’t need to register to use Zestimate but if you need to update the profile of your home you do have to register. Once you’re signed in you can edit your home’s profile anytime. Any details you can add about your home will allow Zillow to make the Zestimate more accurate. 

Zillow is always adding features to make their website a lot better and useful for everyone. Are you trying to sell your house? Zillow allows its users to list their home for free on the website. And there is also the “Make Me Move” feature which lets you put the amount or budget you need to pack up and move then wait for the offers. 

If you want to know how desirable your home is you can use this feature. There are many reasons why people like Zillow too. Because it starts conversations, it increases awareness and it allows the consumer to get a jumping off point before they set out on their buying or selling venture. 

So Zillow is an especially handy tool for buyers, sellers and realtors right? Not only is Zillow a resource to help market your homes or properties to an even wider audience but it also gives you a better chance of a sales success.


Interest Rates are at All-Time Record Low

Interest Rates are at All-Time Record Low
Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates finding new all-time record lows continuing to help keep homebuyer affordability high. 

The 30-year fixed averaged 3.84 percent, down from its previous all-time record low of 3.87 percent last registered on February 9, 2012. 
The 15-year fixed averaged 3.07 percent, also dropping below its previous all-time record low of 3.11 percent set April 12 of this year. 
The 1-year ARM also averaged a new all-time record low in the PMMS at 2.70 percent. 

News Facts 

  • 30-year fixed-rate mortgage (FRM) averaged 3.84 percent with an average 0.8 point for the week ending May 3, 2012, down from last week when it averaged 3.88 percent. Last year at this time, the 30-year FRM averaged 4.71 percent. 
  • 15-year FRM this week averaged 3.07 percent with an average 0.7 point, down from last week when it averaged 3.12 percent. A year ago at this time, the 15-year FRM averaged 3.89 percent. 
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.85 percent this week, with an average 0.7 point, unchanged from last week when it averaged 2.85 percent. A year ago, the 5-year ARM averaged 3.47 percent. 
  • 1-year Treasury-indexed ARM averaged 2.70 percent this week with an average 0.6 point, down from last week when it averaged 2.74 percent. At this time last year, the 1-year ARM averaged 3.14 percent. 

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage.