Archives for February 2007

Will someone please change the channel?

Mpj031638400001I’m watching CNN this morning while I’m getting ready to head into the office (it snowed a few flakes this morning, so being the chicken I am, I’m taking my time before I venture onto the roads)…when I see three commercials within 10 minutes that I found somewhat disturbing.

First commercial:  Ditech…cash out refinance your home with a fixed rate up to 125% of the value!  Well, thank God it’s not an interest only negative amortized ARM!   In light of the increased foreclosures and troubles with subprime lending, I cannot believe I just saw this commercial.   What happens to the borrower who has overextended their home equity and then they lose their job or they need to sale?  Guess what, they can’t.   There’s not ANY equity to pay for closing costs.   Welcome to Foreclosure City.

Next:  Countrywide…offering a no cost loan.  No origination fee, no credit or appraisal fee and no third party (title, escrow, etc.) fees.   This isn’t so upsetting to me (especially after following the Ditech ad).  Anyone can provide a no-cost mortgage.    What the commercial does not tell you is that no cost mortgages do cost a borrower in the monthly mortgage payment by a higher interest rate.  Nothing is free.  Typically, 1% of your loan amount equals 0.25% to interest rate.   If your closing costs amount to $2000 and your loan amount is $200,000, you can increase your rate by 0.25% and have "no closing costs" from any loan originator.  Please always compare good faith estimates by different lenders.   Their commercial was the least offensive–they just happened to be sandwiched between two commercials that got my goat! 

Last:   You know the commercial…the friendly redhead young man challenges you to guess his credit score and encourages you to find yours.   This is great advice.   Where this one slips up for me is that it’s URL sounds just like in fact, I think is a better marketing name than the one created by the big three credit bureaus by order of our government.    Should you not read the disclaimer on’s site, you might believe this is the web site the Fed had created for consumers.   However, this is Experian’s site and should you obtain your "free" report, you’ll be signing up for a credit watch service at $12.95 per month.    Not so free after all, is it? 

I just had to vent a bit.  It’s no wonder people get confused about their mortgages and finances with all of the misleading and deceptive advertisements on television, the internet, and coming to our mail boxes at home.   

Bottom line:  Do your research.   Ask questions.  Be responsible.

Your ARM May Not Be Broken

Mpj040739600001_1You may have noticed on the evening news and the local papers all the bad press about mortgages lately.   Specifically sub-prime, negative amortized ARMs a.k.a. payment option plans (which I am opposed to for 99% of the population), 100% financing and interest-only ARMs…to name a few.  Many sub prime lenders are restating their earnings and are suffering losses.  Some are closing their doors and the remaining are changing their underwriting guidelines.   It use to be very easy to obtain 100% financing with a credit score of 600…some lenders would even consider 580.   Now, the benchmark is 620.   Throughout history, lenders change underwriting guidelines based on market conditions.

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The Blog Made Me Do It

My brother in law, and Vice President of Mortgage Master, the company I hang my hat at, sent me an email after reading the Inman News article that Mortgage Porter was mentioned in:

"I have made an appointment with a psychiatrist for you.  He has a new ward for bloggers who are out of control (2 hours of blogging a day)….I’ve ordered the blogger police control of Seattle to cut off your access to the internet and take your Blackberry and cell phone away for your family’s sake. 

Your Very Concerned Relative."

Too funny!  I do want to clarify something…the two hours a day on blogging is an estimate of time.  And most of the time is spent during the wee hours in the morning.   During the day, time permitting since I do have a "real job", I try to answer comments from readers as quickly as Dsc_0434_1possible.   

In the evening, I’ll revisit my blogs again…usually when I’m trying to make dinner.    Pictured here is a burned jo-jo from just the other night.   Guess maybe I should not blog and cook at the same time! 

How Strong Are Your Legs?

J0384828A borrower in a mortgage transaction is kind of viewed like a chair with four legs.   The legs on the chair provide strength to the base or seat of the chair.   If one leg is shorter than the others, the chair is still strong, but may wobble a bit.   Shorten two legs and the chair becomes less stable.    Three week legs and the chair is just waiting to tip over on you.

So how strong are the legs of your chair?

Consider each of these items as one leg in your chair.

  • Employment.  Having a minimum 2 year history in your line of work (this can include education).  Employment gaps that don’t make sense to an underwriter, may cause issues with getting your mortgage approved.   A lender wants to know that you are going to be able to keep your job and therefore, make your mortgage payments on time.
  • Income.  If paid salary and regular hours, this can be pretty easy to compute.  When your hours vary, the income needs to be averaged.   Also, if you’re paid bonuses or commission and going for the best interest rate (not stated income or no income verified), then your bonuses and commissions are typically averaged for the past two years.   Debt-to-income ratios are crucial for qualifying for mortgages.   A $500 car payment equals $50,000 less home that you can purchase.
  • Savings and assets.   There are many zero down loans, even if you are considering that route, it is in your best interest to have at least three months of your future mortgage payments in savings after all closing costs are paid.  The more money you can put down towards a home, the better your interest rate will be.
  • Credit Scores.   Having scores above 680 are a worthy goal.  A score 700 or more is even better!   Pay your accounts on time.   Keep your balances below 30% of the credit limit for the best scores.   Take care of your credit and it will take care of you.   Credit is reflective.  If your credit score is on the low end, meet with a Mortgage Planner to help you develop a plan to improve your score. 

All of these factors impact how a borrower qualifies for a mortgage.    The more strong legs you have reduces the risk to the lender, which in turn means a better interest rate for you!

Mortgage Porter is in the Spotlight

Mpj039591600001_1Talk about a Happy Friday post!   Last week, I was interviewed by Matt Carter of Inman News,  an internet Granddaddy of real estate and consumer news, about blogging and my articles for Mortgage Porter and Rain City Guide.  This is big time press, to say the least.   

Here is my 15 minutes (or seconds?) of fame (you’re going to love the title):  Mortgages are not sexy party conversation.  In this post, Mortgage Porter is included with many great real estate blog leaders. 

As if this wasn’t enough to qualify for a Happy Friday post, fellow CMPS, Dan Green gave Mortgage Porter a very nice nod in his highly respected blog, The Mortgage Reports.

I think I’m going to go pinch myself now!   

The Cart Before The Horse


Note:  I was contacted by the fine folks at DFI with corrected information to this post regarding continuing education.   My corrections are either striked out or bold.

This week has been a bit crazy with mid-winter break…our three kids all have different break schedules so our family is home instead of vacationing somewhere.  This has provided me with a great opportunity to attend classes and seminars, which typically take a bit of coordinating with getting the kids to schools (they go to three different schools due to their ages).   

Anyhow, on Monday, I went to a seminar by Dustin Luther.   Dustin is the creator of Rain City Guide, a blog that I contribute to that has been a force in the Seattle Blogosphere for years.  This was actually my first time meeting Dustin!  And, the seminar was great.   I learned about Web 2.0–how the consumer is directing the web instead of the web attracting the consumer.  It was fascinating.  He is truly genuine.

Yesterday, I took my first clock hour course to retain my State of Washington Loan Originator License.   It kind of feels strange to take a course before passing an exam that is not yet available (hence the cart and horse photo…I was going for the cart before the horse…but it was taking too much time to find the right photo).   I am assuming I’ll pass the exam once it’s available (or I will be adding a post with a photo of egg on my face).   

The course is required for all Licensed Loan Originators during their first year of being licensed and is on ethics.   This one was taught by NAMB.   I wish it would have been an exam on ethics, instead this was a class or open discussion.   I typically do not attend "lender functions".   When I took the CMPS exam, I really enjoyed networking with the professionals who cared so much to fly from all over the nation to take the three day exam (25% did not pass the first test).   I was very proud to be a Loan Originator (or what ever title you wish to call me) in the company of those fellow lenders.   

At today’s class, I was fortunate to sit with two other fellows who I feel also have very high standards and ethics.   And I do believe overall, the room was filled with the same caliber of people who truly care about serving their client’s best interest before there own.  I mean, they are there spending their time BEFORE taking the exam.  (You must pass the exam to retain your license…you can re-take the exam for $125 a pop). the cost for the exam will be determined by the exam provider and is anticipated to be around $50 -$60.  DFI also recommends that BEFORE a loan originator spends their time and money on continuing education classes, they check DFI’s website to make sure the professional organization or individual course are approved for loan originators or mortgage brokers continuing education.

What was interesting to me is that when you survey a room full of people, ethics can become a bit blurry.  I left the four hour class with my certificate…I have one more class and an exam to go before all of the criteria is met to REALLY be a Licensed Loan Originator.

Viaduct Replacement Vote

Viaduct_1Regardless of what your opinions are with the Seattle Viaduct, any moment now City of Seattle residents will be receiving their mail-in ballots to cast their votes.

Rain City Guide posted an interesting blog this morning (the post is fairly unbiased).   The important to know that there are two questions on the ballets, providing four options:

One: Yes on the viaduct.
Two: No on the viaduct
Three: Yes on the tunnel
Four: No on the tunnel

Jon Ribary’s post is worth the read!   

Need Something To Do Today? Change Your Locks.

Last night, my stepson told me that he heard a story on the news about how a generic key could open locks on homes.   I said “yah, right….” and was pretty surprised when I received my morning feed from Sellsius showing this video:

The locksmith in the video offers some suggestions on how to prevent “lock bumping” such as buying  better locks (some are bump proof) which run over $100 in addition to consider having a security system, good lighting, etc.

When I was looking for this video to create this post, I was shocked to see just how many different “how to pick a lock” videos are on the internet.

Please share this information with your friends and family.    You were looking for something to do on your day off today, right?