So you want to get a mortgage? OK, Call a mortgage lender (like me) and do an application. You have good credit right? You make a good income right? This will be easy right? Well possibly. But it is getting harder and harder to get through this process without feeling like you’ve been violated.

Let’s talk about income first. It’s pretty simple, you have to make enough money to cover your basic debts, including your house payment, and so you look at your paystub and you look at your Year To Date income listed there and tell the lender that you make X number of dollars a month. Then you tell the lender (again…I’m available) that you have a 2nd part time job that your some extra cash at and so you are sure that you will be approved for the amount that you want to spend on a house. You know how much you make. You should be fine. However, after going over all of your income documents the lender tells you that you only qualify for (a lot less). What happened? Well maybe you included overtime income in your Year To Date but after checking it out your lender finds out that you have only been getting overtime for 4 months and your boss won’t guarantee that you will continue to get it. Then the lender looks at the 2nd job, part time income and says “can’t use it” Why? You have been at that job for over 24 months… Yes but in 2008 you made a lot more then you made in 2009…Declining Income due to a bad economy, may not be able use that income.

If you are self employed the process gets even tougher. We will need to get 2 years of tax returns, extentions if that is what you have filed, Profit and Loss statements. and so on.

Just be aware that as you go to qualify for a home loan, underwriters and investors are changing the rules everyday it seems, and it is usually not for the better, If you were qualified for a certain amount 3 months ago. just double check with your lender to make sure that you’re still OK.

Let me know your thoughts and let me know when I can help. Mark Afman

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No I’m not going to get all philosophical on you but I was thinking about the changes in the Real Estate and Lending marketplace while I was listening to that great, old song by The Band, “Life is a carnival, believe it or not, Life is a carnival, two bits a shot”. Now I tend to believe that life is a little more structured then that. I don’t think that it is just a random set of events with no order and no control but sometimes when you look at the events of the past few years in the Real Estate game, It makes you wonder. (Disclaimer: Ultimately, I believe that God is in control but this is more about how we perceive day to day events in our lives).

The bottom line is that the market is still taking a hit with foreclosures, short sales, and much tighter underwriting guidelines. So if you bought a house a few years ago, that property value is probably down. If you want to buy a home now, there is a “chance” that you will not qualify for a loan even though two years ago you probably would have been fine, and that says nothing about trying to qualify if you are self employed…talk about brain damage. In that sense, life is a gamble. There may be a very few experts that have the knowledge to see the long term changes in a market before it happens, but most of us are either beneficiaries or victims of those changes.

So where does that leave us. Well right now it is tougher to qualify for a loan and buy a home, but it is an excellent time to buy. Prices in Denver are beginning to settle down and even go up in places. Interest Rates on loans are lower then they have been in probably 50 years. In a 5 year period you can save as much as $8,000 (Does that figure look familiar? Tax Credit maybe?) in the savings that you will get with the rates in the low 4% range. There are still safe Down Payment assistance programs available.

So is life a Carnival? Well, it can be. Is it random? Not really, but there are random parts to it. I still believe that you can’t control what life throws at you but you can control how you react to it. Carnivals are supposed to be fun and even though you take a risk (”Two Bits A Shot”), if you’re smart you can win. If you lose, try to keep it to a minimum. You take a chance when you buy a home, but over time, your risk is minimized. There are very few homes that go down in value and stay there forever.

If you want to see what you qualify for, contact me. By the way, if a lender tries to charge you an up front fee, like an application fee, walk away. That should not cost you a dime.

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This post is for Realtors that want to expand or start their electroninc marketing. I have a couple of classes for you to attend. These are both free and will help you learn more about electronic media.The first is scheduled for August 25th from 2-4 in the afternoon. It is called Social Media 101 and it will cover the following:
* Understanding the difference between “business” and “hobby” in
social networking
* Incorporate the most important social networks to your business,
like FaceBook, LinkedIn, Twitter, YouTube, etc.
* Uses of Video in Marketing
* Understanding the do’s and don’ts of social networking
* Guided walk-through on setting up your social networking accountsThe second session is scheduled for September 9th from 10am to 12 noon. It is called Master Your Online Marketing and it will cover the following.

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The last message I sent out was all about my view of what it means to be successful and who is ultimately responsible. This one gets back to the the practical things that you need to know if you are looking to buy a home.

If you are anything like me, it takes awhile to learn something. I’m not the quickest guy around but I like to think that when I learn something, it sticks. When it came to learning about what it takes to succeed (which, by the way, is nowhere near over) I had to learn the hard way.

I have struggled with the idea of writing this down. I certainly do not want to come off as some guy that has all the answers but maybe what I relate here could help you in your career and maybe I can learn something from you. If you are already a top producer then this may be something that you don’t need to read. But if not, then something here might make sense.

I have been in some type of sales position most of my adult career. I have sold everything from welding supplies to, obviously, mortgages. For a long time I thought that the successful people were lucky and got their success from others. In the back of my mind, I was always hoping that the top producer in my company would somehow take a liking to me and help me by just handing some (or all) of their business to me and I would be all set after that. Imagine my continued disappointment when that did not happen. Maybe a new product would come along that would jump start my career and I would make millions. Again, disappointment. I learned to admire the people who seemed to make it big but I just thought that somehow they were just luckier then me. I started reading all kinds of books from the people that seemed to know how to make it big and there were some great ideas in those books but it still did not make my career take off.

So what happened? Again I am not trying to say that I am the most successful lender around but in the last few years I picked up on something my Dad told me years before. (Remember it takes me awhile to learn things.) He told me that no one will make it for you except you. None of the people that I admire and have been a success in business ever gave me a book of business that I was able to rest on. None of them ever gave me any money. They were willing to share some good ideas but unless I was willing to do the work myself, I was not going to make it. Most of these people, by the way, ever had an easy way of it either, They made it despite difficult markets and their own mistakes. You have to be confident in your abilities even if you are new to the sales. You have to be humble enough to learn from those who know how to make it in your business. You have to be open to new ideas and be innovative. Some of the most successful business people have had to completely re-invent themselves when the market changed. You have to be willing to try something, knowing it might fail. You have to be willing to offer yourself to your clients without, necessarily, expecting anything in return. You have to be willing to give back through volunteering and offering your experience to others that are willing to learn from you.

So who’s in charge here? As corny as this sounds, you are. Or if you are like me, God is, but then you are. It took me awhile to learn that but now it seems to have stuck.

By the way, rates are ridiculous right now. Maybe you can’t have the tax credit anymore but an FHA loan is as low as 4.25% and that savings will ad up to $8,000 real quick.

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Posted by Mark Afman under Home & Mortgage & Mortgage Blog & Real Estate | No Comments »

Mortgage Insurance…It strikes fear in the heart of most home buyers, or at the very least it makes them angry. I have yet to have anyone say to me that they are happy that they have to pay a chunk of extra money in the house payment just because they don’t have a big down payment. Well, I can’t say that I blame them. Nobody wants to pay anything extra…especially when they really don’t understand what it does. “So Mark” they say, “You mean to tell me that I have to pay this insurance premium every month as part of my house payment to protect the LENDER in case I stop making the house payment?” Well…Yea. Doesn’t seem fair but it really is benficial.

It used to be that banks would only lend to people with a down payment of 20% or more of the purchase price of the house. As you can imagine that left out a pretty big percentage of the population. So the government came up with an idea. If the lenders would loan more then 80% of the value of a home, they would be protected from the additional risk by taking out an insurance policy that would protect them in case the loan went bad. The down side is that the premium on this insurance had to be paid by the home buyer. At first this insurance was provided by the federal government and was done through the Federal Housing Administration and is the same basic package today through FHA loans.

Later on when Fannie and Freddie came into being and were separate from FHA, they had to have some way of protecting the lenders from the possible loss of loans that were not paid back. They went to private financial companies to get the same thing and Private Mortgage Insurance (PMI) was born. PMI is provided by such companies as RMIC, AIG, and MGIC. These companies have suffered with the whole “mortgage meltdown”. You may remember that AIG was the subject of quite a bit of bad press when they needed to be bailed out but then paid out some big bonuses to some of their employees.

A few details to be aware of is that FHA MI and Conventional PMI do basically the same thing but there are a few differences. FHA MI is paid by the borrower in 2 different ways. Part of it is paid as a one time ”up front” mortgage insurance premium that is (at least right now) equal to 2.25% of the loan amount. This one time premium is allowed to be rolled into the loan. The rest of it is paid in the monthly MI premium that is equal to .55% of the loan per year and that is divided by 12. PMI does not have any “up front”portion so all of it is paid in the monthly premium. The PMI amount varies based on the risk. The more you put down and the better your credit is, the lower your PMI will be. The other difference is that FHA will charge their MI for a minimum of 5 years no matter how much money is put down. So even if someone put 20% down but needed an FHA loan, they would pay that MI for the 1st 5 years. PMI is only charged if the borrower does not have 20% or more to put down.

Another thing to be aware of with PMI companies is that since they went through the troubles of the last couple of years, most of them require that they underwrite the loan in addition to the lenders underwriting. They want to make sure that the loan is a good loan so they don’t have to pay out any insurance claims. The bottom line is that without MI or PMI, most people could not get a loan so it seems evil but it’s kind of the price you have to pay for not being able to save up a big down payment.

If you have any questions on this please feel free to contact me

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Now that the tax credit has expired (except for military personal), many in the real estate industry are asking themselves where is the market going? There has been some great information put out in the last few days that may give us a clue. On John Rebchooks blog www.insiderealestatenews.com (sponsored by Universal Lending) he posted a piece talking about the median price of recent home sales. That price fell below $300,000 and the bulk of those sales fell between $100,000 and $200,000. His article is titled “Home sale sweet spot below $300,000″ Continue Reading »