Archives for January 2011

My Interview of Frank Garay and Brian Stevens

The day before Seattle reBarCamp, Frank and Brian from Think Big Work Small, will be here teaching a one day class on video blogging and marketing for real estate professionals. Check out my quick video interview:


The NW Video Marketing Summit takes place on March 2, 2011 at the Seattle Center NW Rooms.   To RSVP or learn more about this event, please visit the cost for the event is $100 and you'll walk away with your own video blog.  Real estate agents can receive 4 hours of c/e credit.

PS:  Seattle reBarCamp is on March 3, 2011 at the Seattle Center NW Rooms.

Links for both events are on the left.

5 Ways to Derail Your Loan Approval

MonorailYou’re getting ready to buy a home or refinance your home with your closing day around the corner when your mortgage originator contacts you to let you know there may be a problem.  Some issues may not revealed until days or sometimes weeks into a transaction.  Anytime documentation is provided to the mortgage company, it has the potential to raise more questions or require more documentation to satisfy underwriting guidelines.   Here are five situations to be aware of that can cause headaches during the loan process.

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How Much Info Can Your Mortgage Originator Share – Part 2

Jillayne I asked Jillayne Schlicke of CE Forward to chime in on a question (below) that I received from one of my readers.  I’m happy to say, she wrote an entire page and therefore, I’m sharing this post, written by Jillayne with you.  Part 1 of this article, where I address the question, can be read by clicking this link.

As a loan originator, is it ethical to deny someone for a loan and then turn around and share not only that the loan was denied, but the EXACT reason the loan was denied (for example: too many NSFs, large deposit in checking account, hours cut back at work, etc.) with the applicant’s Realtor as well as the listing agent who in turn shares it with the sellers?

Jillayne’s response:

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How Much Info can my Mortgage Orignator Share with my Real Estate Agent?

Secretmortgageporter I received this question a while ago from one of my subscribers:

As a lender, is it ethical to deny someone for a loan and then turn around and share not only that the loan was denied, but the EXACT reason the loan was denied (for example: too many NSFs, large deposit in checking account, hours cut back at work, etc.) with the applicant’s realtor as well as the listing agent who in turn shares it with the sellers?

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Determining Net Rental Income when Qualifying for a Mortgage

EDITORS NOTE – 11/22/2014: Oh the joys of writing a mortgage blog… guidelines change constantly. Information in this post is not current.  Please check out this more recent article on rental income for conforming mortgages here. And if I can help you with your investment (or any) property) in Washington state, please contact me!

Rental income is generally not fully credited when qualifying for a mortgage.  Lenders will “discount” the rent because of the cost and risk associated with owning investment property.  If someone does not have at least two years history as a landlord, they may not be able to use the rental income at all and may have to qualify with the full mortgage payment.

Conventional financing allows a qualified investor to receive credit for 75% of the gross rental income.  From this figure, property taxes, insurance, home owners association dues and any mortgage payments are deducted to create the amount of rent (positive or negative) that the lender will use for qualifying purposes.

For example, a property has a $2,000 total mortgage payment (PITI) with no HOA dues and receives rental income of $2,000 per month.

$2,000 rental income x 0.75% = $1,500.  $1,500 less the mortgage payment of $2,000 creates a net rental income of negative $500 per month.   This would be factored as a debt and not a credit or “breaking even” on the loan application for qualifying.

Of course if there are multiple investors involved, the net rental income is split accordingly.

FHA does not have the same two year history requirement for existing rentals as conventional loans do.  The vacancy factor in the Seattle area is 15% which means that 85% of the rent is allowed to be factored as income.  FHA loans may use future rental income (no 2 year history) when converting an existing home into a rental if the borrower is being relocated or if there is enough equity in the subject property.

To document rental income, be prepared to provide tax returns and signed lease agreements. Lenders will use the net income from your tax returns.

When you have rental properties, be prepared to have additional reserves (savings) required based on how many properties are owned.

If you have questions about qualifying for a mortgage for a home located in Washington State, please contact me.  If you would like a personal rate quote from me for an home located in Washington state, click here.

Martin Luther King Day

In observance of Martin Luther King Day, Mortgage Master Service Corporation is closed.  We will reopen for business as usual tomorrow morning.

This video is an indepth interview of Martin Luther King Jr. from NBC's Look Here back in October 1957.

I’m Not Just a Blogger

I recently had a parent of one of my son's friends say to me, "I thought you were in mortgage, are you an originator?"   She had googled mortgage terms and was surprised to have discovered my blog.

This is my fault.  I'm not really a salesperson.  I don't push my business cards on people and often, I don't have any on me when someone asks for them…which isn't a good practice for any business professional.   Sometimes I'll strike up a dialogue with someone who has read my blog and at the end, they'll ask if I originate mortgages.  It's flattering to have my blog used as a resource for information on mortgages for the greater Seattle area, however originating mortgages is how I pay my bills and make a living.   One day I may sell advertising on my blog…I'm not there yet and it probably wouldn't be enough income to keep the lights on!  Plus, I enjoy helping people with their mortgage needs.

A real estate agent contacted me earlier this week wanting to work with me again (she had left for a spell due to an "in house lender").   She had some great questions that I would be fitting for this post:

What type of mortgages do I originate:  Conventional, FHA (including 203k), VA, USDA and jumbo mortgages.

Are you a mortgage broker:  Not really.  Technically we are a Correspondent Lender which is similar to a mortgage broker as I can shop rates and programs from the banks and lenders we work with.  A big difference is that we fund the mortgage and sell it after closing.  A significant majority of my loans are processed and underwritten in-house at our main office in Kent.  We make the underwriting decisions based on the loan guidelines.  I think the last time I brokered a loan was 2-3 years ago!  

The difference between us and a bank is that, again, we can shop different lenders based on rates and products.  Most mortgage bankers are limited by their own products (or are paid better staying w/their products) and although many have their own processing and underwriting, they are typically down in huge remote centers and not "on-site".   Also, mortgage originators who work for depository banks or credit union are not licesed per the SAFE Act with the NMLS (they're only registered).

Where do I take loan applications:  I'm happy to meet people at my office, at the real estate agents office or at a coffee shop if needed (I prefer an office).  OR my clients have the option of completing their application on line (see the link above) and I will review their application with them over the phone.  Because the on-line application helps me to be more efficient, I offer a credit of $300 off closing costs (first mortgages only) at funding.  Some clients would rather meet face to face, and I totally understand and will accommodate that, others prefer working "on line"…and of course the telephone works great too!

Will you prequalify people over the weekend?  Of course.  Preapprovals are possible too depending on if the buyer/borrower is able to provide all requested documentation.  A prequalification is definitely quicker.

So I thought I'd take this opportunity for a quick commercial break to let everyone know that I am very happy to originate mortgages for homes located in Washington state.  I've been originating mortgages since April 1, 2000, I'm NMLS licensed through 2011 and plan on continuing with my career as a Mortgage Originator.

And now back to our regular programming.

Two Great Real Estate Events coming to Seattle Center in March

In less than two months, real estate agents, mortgage originators and other real estate folks, there will be two events they really should consider attending at the Seattle Center's Northwest Rooms.

On Wednesday, March 2, 2011, Frank Garay and Brian Stevens (the guys from Think Big Work Small) will be here to teach real estate peeps about video blogging at the Northwest Video Marketing Summit.  This is an all day event (sounds like a boot camp to me) where at the end of the day, you will have your own video blog.  This event is open to all real estate peeps and real estate agents may receive 3 clock hour credits.  The cost for this day long education (which includes your blog) is only $100.   For more information or to rsvp, click here and be sure to watch their video below.

The following day, Thursday, March 3, 2011, is something near and dear to my heart:  Seattle RE Barcamp.  This will also take place at the Seattle Center Northwest Rooms (same place as last year). 

The Seattle RE Barcamp is an "un-conference" where real estate professionals learn peer to peer – not planned presentations.  The agenda is determined the morning of the event by what the attendees (participants) want to learn.  Ideally, participants are sharing with each other "what they're doing now".   It is all about active learning and sharing and it's not limited to social media; latest real estate trends and issues are also discussed.   RSVP for Seattle RE BarCamp here.

There is no fee to attend the Seattle Real Estate BarCamp – it's FREE!  We depend on our sponsors to keep it that way.   If you're interested in supporting this ad-hoc event and having the love and adoration of 300+ real estate professionals, please click here.  By the way, I'm a proud sponsor of this event and so are Brian and Frank. 

I hope to see you at both events.  

Please spread the word!  You can retweet on Twitter (hash tags for the events are #vmssea and #rebcsea) and post this info on Facebook.  Here's a flyer for Seattle RE Barcamp that you can print and post in your office.