Should you work with a local lender?

The other day, while on Facebook, I came across a stat that my friend and real estate educator, Jillayne Schlicke had posted in response which surprised me. Her comment was in response to an article she had shared on Zillow acquiring a mortgage company that has licenses in all 50 states.

Of course I asked her if I could quote her and not only did she say “yes”… she provided me with some great commentary that I’m going to share with you now.

Jillayne Schlicke, Mortgage & Real Estate Educator | CE Forward, says:

“The explosive growth of large, non-bank mortgage lenders licensed to do business in all 50 states means loan originators are just telemarketers, often centrally located in one city and they’re sitting at a desk waiting for the phone to ring while the nationally branded company’s ads run on TV and radio.  Once the telemarketer, also known as a “phone officer” takes the loan application, the file is sent to a massive loan processing center, where the real work is done.  LOs are typically new or newer because the pay is low and the hours are long, which leads to burnout.

The other area of growth is very small mortgage broker firms licensed in many states but not located in WA, that send out thousands and thousands of deceptive advertising via U.S. Mail targeted towards Veterans, senior citizens, or anyone who recently purchased or refinanced, trying to get the homeowner to refinance again at a deceptively advertised lower rate.

A smaller area of growth is people who might have gone to college in WA State or use to live here, but have moved to another state such as Idaho, Oregon, California or Arizona.  They still have friends and family in WA State, though they are located out of state. They obtain an LO license to do business here in Washington but do not write that many loans for properties located in Washington. The downside is when companies and their LOs do not do business in this state on a regular basis, our state guidelines, rules, laws, might not be followed 100% of the time.

I highly recommend WA State consumers work with a local, licensed loan originator who is located right here in this state; someone you can meet with face to face, and a physical office you can walk into, if you ever need to.  Purchasing a home and/or refinancing is arguably one of the largest financial transactions in your life, filled with emotion and stress.  If you think you’re gonna do this all online without talking to a human person, you’re lying to yourself.

I couldn’t agree more! Thank you, Jillayne 🙂

 

Private Mortgage Insurance Pricier for Single Borrowers

Private mortgage insurance is required on conventional mortgages when there is less than 20% equity on a property, when the loan-to-value is greater than 80%. Private mortgage insurance (pmi) that is paid monthly automatically drops off the mortgage payment once the mortgage balance reaches 78% of the original loan amount. Private mortgage insurance premiums are intended to be risked based. The more equity or down payment on a home and the higher your credit scores are, the lower the premiums tend to be.

In June, many private mortgage insurance companies changed their rates for their mortgage insurance premiums. One of the most notable changes, in my opinion, is that private mortgage insurance companies are charging a higher premium if there is only one borrower on the loan. This adjustment is in addition to any other risk factors, such as loan-to-value and credit score. Since when is being single a risk factor?

This chart from a private mortgage insurance company shows the factors that are added (or in this case deducted) from a base rate to determine what the private mortgage insurance premium will be. So a single borrower with credit scores of 700 or higher, will pay a factor of 0.13% more than a transaction with more than one borrower. To determine what the difference is (or a private mortgage insurance rate), take the loan amount and multiply it by the factor (0.13%) . For the monthly premium, divide that figure by 12.

It’s surprising to me that private mortgage companies would single out those who are financing a home without a co-borrower. I assume that pmi companies are thinking that the more borrowers, the less risk of foreclosure. However this seems to feel like discrimination to me. It will be interesting to see how long this rate stands. Obviously, I hope this policy changes.

How does economic news impact mortgage interest rates?

Mortgage rates are based on bonds (mortgage backed securities) and are traded fairly similar as stocks. Investors tend to favor stocks over bonds as stocks tend to provide a better return. However, investors will opt for bonds over stocks when they are seeking safety when markets are tumultuous.  When the stock market is on a run, odds are mortgage rates may be moving higher as investors are selecting stocks over bonds. And when the stock market is tanking, mortgage rates tend to improve for the same reason. [Read more…]

Mortgage Rates Bouncing Along

Freddie Mac released their Prime Mortgage Market Survey this morning showing that last week, average mortgage rates slightly ticked higher.

I don’t post the PMMS weekly reports from Freddie Mac every week (you can see them here), however from my last post on this, you can see there is very little difference in interest rates compared to almost 1.5 months ago.

This is good news for people who are considering buying or refinancing their homes with mortgage interest rates staying historically lower (see the bottom time line on the pic above). If you need a mortgage on a home located anywhere in Washington state, where I’m licensed, I am happy to help you!  Click here for a mortgage rate quote.

Why is My Mortgage Payment Going Up?

If you live in the greater Seattle area, you may be receiving a notice from your mortgage servicer stating that they need to adjust your mortgage payment because of an “escrow shortage”.  We actually just received such notice from our mortgage servicer. [Read more…]

USDA Maps Updated

Earlier this month, USDA updated the maps that determine if homes are eligible for USDA financing. USDA allows eligible home buyers to purchase a home with no down payment. In order the qualify, the borrowers must meet the income limit requirements and the property needs to be in a designated rural area.

Current eligible areas include areas like Enumclaw, Fall City and Vashon Island as well as parts of Black Diamond and parts of Duvall. The specific address really needs to be ran as homes directly across the street from each other may or may not be eligible. [Read more…]

The Beauty of a Bridge Loan

I recently helped a couple successfully close on their new home in Seattle before having to close on their former home in Everett. By using a bridge loan to access equity on the Everett home, they were able to make a winning offer on the Seattle home without it having to be “subject to the sale” of their former home. This help to make their offer far more attractive in a very competitive real estate market. [Read more…]

Coming Soon: Freddie Mac’s HomeOne Mortgage Program

Later next month, Freddie Mac will be offering a new program for first time home buyers. This mortgage program offers low down payment options without the income limit or geographic restrictions that Home Possible has.

HomeOne will be available for both purchases and rate-term refinances on single family dwellings. At least one borrower on the application must be a first time home buyer when the transaction is a purchase and home buyer education is required. [Read more…]