Logan Utah Mortgages and Real Estate

I've heard some mortgage horror stories lately from borrowers that came to see if I could help them after their horrendous experiences.

         True Story #1

 This borrower had gone to one of the "big banks" in June of 2008 and did a loan application for a refinance to take some cash-out for an investment property that he wanted to purchase. Initially his loan application was approved and the loan officer moved forward with the process (i.e. ordering an appraisal, title report, collecting necessary documentation, etc.). After 4 months of being jerked around, the loan officer not returning phone calls, and processors telling him inconsistent stories of why it was taking so long, the borrower came to me and we closed the loan in 3 weeks. He was a very solid borrower and it was a very smooth loan transaction.

        True Story #2

Another borrower who I recently helped was recovering from the disappointment of losing the opportunity to purchase a home that they wanted because they found out on the day that they were suppose to close that their loan file had been denied because they had a late payment on their credit report. This was after the fact that the loan officer had issued them a pre-approval letter, collected a $400 check for their appraisal, and told them that everything was on schedule to close on time.  Oh...and they lost their $500 earnest money also!

These are horror stories that should never happen or even get close to happening! To me it seems that the problem in each of these cases is that the loan officer was either too scared to tell the borrowers and Realtors the truth about the loan process or too lazy to communicate with everybody.

I believe that communication and truthful communication are key to a smooth loan transaction, whether it be with the borrower, escrow agent, or Realtor. Something that has helped me with this communication is a software program that I purchased which helps me communicate with everyone involved in a loan transaction.

COMMUNICATION IS KEY

No matter how experienced a loan officer may be, there are just some things that occur in a loan transaction that can't be anticipated. When these things come up it's key that everyone involved be made aware of the situation immediately, so that it can be remedied.

I've also realized that loans go so much more smoothly when people are informed of what is going on. That's why I purchased a software program which allows me to notify everyone involved in the transaction when the status of the loan has been updated (e.g. credit report pulled, loan locked, appraisal received, conditions received, etc.,etc.)

The image to the right is an example of the emails that I will send to the listing agent, the buyers agent, their assistants, the escrow agent, the home owners insurance agent, the borrowers, the sellers, my processor, and me (I like to know that it was sent), and anybody else that might need to know how the process is going.

I can also give certain individuals access to a password protected website where they can log-in and view the appraisal, loan docs, good faith estimate, and any other documents that I choose to upload.

I have received great feedback for this service and I feel like it is something that sets me apart from my competition.

The fact is that it's not hard to communicate and it just takes a little bit of effort. But this little bit of effort can make the difference between a rocky and a smooth transaction.

Whenever I meet with a potential client, "What are your closing costs and interest rates?" is usually one of the first questions. It's a good question and one that I would answer even if it wasn't asked. The problem with this question is that it usually comes at the very beginning before I know anything about the individual, their credit scores, down payment, employment history, etc.

The fact of the matter is that interest rates and closing costs are going to be different for everybody depending on the individual characteristics of their loan application. Characteristics such as credit, the loan amount compared to the value of the home, and the type of loan program (e.g. FHA, conventional, etc.) will affect the interest rate and closing costs.

For example, somebody with a 740 credit score and 20% down payment might qualify for 4.875% on a 30 year fixed. Another borrower with a 720 credit score and only 10% down would qualify for 5.25% on a 30 year fixed. Or they could choose 4.875% but it might cost them an extra 1.5% of closing costs.

The other caveat that many borrowers don't realize is that they have a choice of whether they want to pay more closing costs to get a lower rate or less closing costs and take a higher rate. For somebody that is going to be in their home for 30 years and make regular mortgage payments it makes more sense to get as low an interest rate as possible regardless of the closing costs. It's also true that a borrower who will only be in their home for 2 years should take a higher rate and pay less closing costs.

So if the next time you ask "what are your closing costs and interest rates?" don't be surprised if I respond, "What interest rate do you want?", because the fact is that you have a choice.

I closed a loan this week that made me love my job as a loan officer even more and I thought I should write a blog post about it. 

 For the past year the Jones family (names changed for obvious reasons) didn't think they could get a mortgage to consolidate some medical bills that they had because they had heard about how hard it was to obtain financing (Thank you media...not!) with their credit score which was below 700.

The Jones were living paycheck to paycheck and dipping into their savings each month because of these other debts. Mr. Jones was stressed and Mrs. Jones was working more hours at work to make ends meat. These added stressed were making life much more difficult. They would have loved to do something but they were so convinced that they couldn't obtain financing that they didn't even try to talk to a loan officer.

About a month ago, a good friend of the Jones family convinced them to give me a call to see if there was anything that I could do. When I first met with them the way that the Jones were talking about their credit and their debts and situation, at first I didn't think there was anyway that I could help them. But after completing the loan application and pulling their credit, it turned out that I could get them qualified for an FHA loan.

The Jones were accurate in thinking that they could not get conventional financing but they didn't consider an FHA loan. An FHA loan is a government backed program that has more lenient guidelines and still allows people to get financing with great interest rates.

To keep a long story shorter, after about 25 days from our initial meeting, the Jones were able to pay off their old mortgage, a high-interest second mortgage, 2 credit card bills, some medical bills, and lower their monthly payments by over $600 with a single FHA mortgage at 5%.

The Jones were so happy and Mr. Jones told me that he felt like a huge weight had been lifted off of his shoulders. Because of the refinance, they were going to be able to start adding to their savings account again.

I love helping people like the Jones family. I think that mortgage brokers and loan officers have taken a beating in the media as of late but they don't often report about these kind of stories. When I can help someone like the Jones family, it makes me proud to be a loan officer.

Mortgage Rates for the Logan Utah Real Estate market as of 12/10/2009

Conventional
-30 year fixed 4.875% (APR 4.987%)
-15 year fixed 4.25% (APR 4.366%)
-7/1 ARM 4.25% (APR 4.177%)
-5/1 ARM 3.625% (APR 3.554%)

FHA
30 year fixed 5.0% (APR 5.566%)
15 year fixed 4.5% (5.143%)

USDA Rural Housing
30 year fixed 5.0% (APR 5.620%)

If you have any questions about these rates, please contact John Neil at 435-770-2709.Mort

Interest rates for Logan, Utah are up a little bit today..

Conventional Loans:

-30 year fixed 4.75% (APR 4.874%)
-15 year fixed 4.25% (APR 4.355%)
-7/1 ARM 4.125% (APR 4.0%)
-5/1 ARM 3.625% (APR 3.544%)

FHA Loans:

-30 year fixed 4.875% (APR 5.344%)
-15 year fixed 4.5% (APR 4.992%)

USDA Rural Housing:

30 year fixed 5.0% (APR 5.433%)

Questions: 435-770-2709

The profession of loan officer has been beaten up pretty badly in the media as of late. We were blamed for the sub-prime crisis and consequently much of the problems in the financial system. It's obvious now that there was some unscrupulous lending going on. Many of the loan programs that got borrowers into financial trouble are gone and I suppose that many of the dishonest loan officers are gone with those programs.

Even with all the changes there are still some bad loan officers out there. But there are also some good ones. It can be hard to know who is who and whether a loan officer is going to provide great service or not. The following lists should help you know what to look for.

A "good" loan officer should...

     - Be available 24/7
     - Ask a lot of questions about your situation and listen more than talk
     - Present you with multiple options
     - Disclose how much they will make on the transaction
     - Provide you with a good faith estimate and a guarantee that it will not change at closing
     - Explain the option of locking or floating the interest rate
   
    

A "good" loan officer should NOT...

     - Try to predict the future of interest rates because nobody knows!
     - Set unrealistic expectations for closing dates and times
     - Collect a check for the appraisal until the borrower has had 3 days to review the initial disclosures
    

These are just a few things to look out for when you are meeting with a loan officer. I like to think of myself as one of the good ones that is trying to give the profession some dignity again. I think that the changes that are occuring in the industry are a good first step to helping establish the consumers trust in the mortage industry again.

If you can think of any other things that a good loan officer should or should not do, I would love to see your comments on this.

I'm happy to announce that Shane Calder of Cornerstone Real Estate has been selected as MortgageLogan.com's Realtor of the month. Shane Calder is a true professional and Logan Utah is lucky to have him as a real estate agent. I had the opportunity to ask Shane a few questions about himself and real estate and this is what he had to say...

1.      Why did you choose Real Estate to make a career?

Helping people buy or sell real estate is a huge responsibility.  I like the fact that you are helping people purchase something that they want.  You don't have to use shady salesman techniques to make someone purchase or sell a home.  They want to do it.  If I do my job, people are happy and that is the best reward in working in real estate.

2.      What do you like about Real Estate?

The real estate market is ever changing.  The key to being a successful real estate agent is staying on top of the changes and adapting to the current market.  It is difficult and challenging.  I find myself stepping out of my comfort zone to be successful.  Approaching people is not the easiest thing for me.  My constant drive is I am helping people make the most important decision of their life, and I want to make sure that it is the right one.

3.       Is there anything unique about the Logan Utah Real Estate market compared to other areas of Utah?

The most unique thing about the Logan, Utah market is that it has been fairly constant.  Even though the rest of Utah and the country took a big jump and then a fall, Logan has remained unusually consistent.

4.       Where do you see yourself in 10 years?

In ten years I see myself still in the real estate market.  I want to expand into residential and commercial development.  Currently, I am studying those fields and really excited about the outlook on Cache Valley.

5.      Tell us a little bit about yourself and your company.

 I live with my wife and two children in Nibley.  We love Cache Valley and look forward to being here a long time.  I have been doing real estate for a little over 4 years now, and love the endless possibilities that it possesses.  I have worked with investing, residential, and commercial properties.  We enjoy the beautiful scenery, endless outdoor activities, and going to Utah State University sporting events.   

Thank you Shane for being MortgageLogan.com's Realtor of the month.  If you or someone you know is in need of exceptional real estate service, you can contact Shane Calder at 435-760-2009 or email him at shane@utahcornerstone.com.

Utah First Time Home buyer: 10 Dos and Don'ts!

1. Do hire a real estate agent: Hiring a real estate agent won't cost you anything (in the state of Utah the real estate agents commission is paid by the seller) and it could save you a ton of money. A good real estate agent will not only make sure the transaction goes smoothly but that you don't get taken advantage of.

2. Do get a home inspection: A good Realtor will also recommend this to you. A home inspection in Utah will run you anywhere from $200 to $300 but it could save you thousands in the long run. A licensed home inspector will check all the components of the home and can detect things that can't be seen with the naked eye. I recently had a borrower whose inspector found Asbestos in the home he was going to buy. The repairs would have cost him thousands. Luckily he only spent $250 and moved on.

3. Do attend a first time home buyer workshop: In most cities in Utah you can find a home ownership workshop sponsored by either a local University or a local real estate professional. In most cases, these workshops are free and can give you some much needed insight into the world of buying a home.

4. Do establish a realistic budget: What you can afford and what you can qualify for can be two very different things, even in today's climate. It would behoove first time home-buyers to establish a realistic budget to see how much they can afford. In particular, they will need to analyze how much they are currently paying in rent and how much more they will pay for a mortgage (including property taxes and insurance), utility costs of a the new home, annual home repair costs, etc.

5. Do get pre-approved first: Most real estate agents will want you to meet with a loan officer to get pre-approved before they will take you out looking for homes. When you do meet with your loan officer, make sure to bring your last 2 years tax returns with W'2s, Last 2 pay stubs, and last 2 checking and savings account statements. By bringing these documents, the loan officer can give you an official pre-approval and not just a pre-qualification.

Don'ts for Utah First Time Home buyers

1. Don't rush into buying a home just to get the $8,000 tax credit: $8,000 is a lot of money but if you buy the wrong home which requires constant repairs, that $8000 won't last very long and you'll wish you took more time finding the right home.

2. Don't gamble with the interest rate if you are comfortable with the payments: When you finally have a home under contract your loan officer will give you the option of locking or floating the interest rate. My advice is this: Nobody knows the future of interest rates and if you are comfortable with the payments, lock it! Getting a little bit lower rate is not worth the risk of having to take a higher rate and a payment that is more than you budgeted for.

3. Don't do any repairs on the home until after escrow has closed: Once again a Realtor would never allow their buyer to do something so stupid, but I have heard of buyers that did extensive repairs and spent a significant amount of money on a home only to find out that the deal wasn't going to work out.

4. Don't try to time the market. The housing market is kind of like the stock market in that you will never be able to pinpoint the bottom until everything has turned up. How else can you pinpoint the bottom? Teal estate can be a great hedge against inflation but more importantly it is a home. Focus on personal lifestyle needs more than trying to time the market.

5. Don't get a loan from a company that advertises "creative financing"."Creative financing" is just a euphemism for "you are going to get screwed". Stick to the basic loan programs which are easy to understand and, more importantly, are affordable.

When you are buying a home you can't always rely on your loan officer to tell you what you can afford. The fact is that what you can qualify for and what you are comfortable with can be two very different things. To find out if you are truly comfortable with a potential monthly payment there are a few things that you should do...

Develop a Realistic Budget
You should develop a monthly budget and write down every single monthly cost and include a contingency fund of 10% for the unexpected. After the mortgage payment, do you still have enough to put some into savings? into an emergency fund? Are you going to have to cut out cable/Internet, eating out, or other luxuries that you can't do without? If you are uncomfortable with your answers, look for a different house.

The Industry Standards
You could also use the standard "housing ratio" and "debt to income ratio" which underwriters use to determine whether the payments are affordable. Those standards are that you shouldn't spend more than 28% of your gross monthly income on your mortgage payments and that you shouldn't be spending more than 41% of your gross monthly income on your mortgage payments along with other monthly debts (e.g. car payments, credit card payments, student loans, etc.)

It's possible to get approved if your ratios are higher than these standards, if you have very good credit or a large down payment for example. But unless you live very frugally it's likely that you will struggle with a mortgage payment that high.

Account for all increases!
you need to look at your current housing expenses and take into account all of the increases that you will see if you buy a new home. You will need to ask yourself at least these questions...

• How much more is the new mortgage payment (including hazard insurance and property taxes) vs. our current rent payments?
• How much more or less will the utility bills be?
• How much do we need to set aside each month for potential home repairs? (Studies show that you will pay 3.5% annually of the purchase price for a new home and 4.5% for an older home)
• Is there an HOA fee that we need to account for?

*You also need to find out how much more of a tax refund you will get because mortgage interest is tax deductible.

The Eight Hour Rule
If you have taken all of the above steps and passed there is still one more test that you need to be aware of. You can always fall back on the eight hour test to determine whether you will be comfortable with a new mortgage payment. If you find yourself reaching for the Tylenol PM at 2 am, chances are that you will not be comfortable with your new mortgage payment.

For those that are interested in purchasing a home in Logan, Utah, I will be teaching a first time home buyers class on October 15th, 2009 in conference room 305 of the University Inn on Utah State University Campus from 6:30pm to 8:00pm. Those in attendance will learn about...

     -The $8,000 tax credit
     -The $4,000 home run 2 grant
     -The $7,500 "Welcome Home Own in Logan" grant
     -The BRAG down payment assistance program
   

Some other topics that will also be taught are...

     -What you need to qualify
     -How to make the loan process go smoother
     -How to effectively shop for a mortgage loan
     -How to buy a multi-family property and save money on your mortgage payments

Other topics that may be taught...

     -100% financing options
     -How to buy a home with a co-signer
    

If you are interested in attending this class, please contact John Neil at 435-770-2709 or john@mortgagesbywms.com to register.