"Ask Mac About Mortgages"

Most often,  there are attractive mortgage loan incentives from the home builders through their preferred lender. The builder incentives can be provided in builder upgrades or applied to your closing costs.  It depends on the builder, market, location, and price. Usually, the incentives are 2 to 3 percent of the home base price. It is next to impossible for a competing bank or mortgage lender to match these incentives because the builder covers the costs.  There are many advantages to both the buyer and the builder for using their preferred lender too. The benefit for the builder is your home purchase closes on time with their preferred lender. The builder can pay their subcontractors and continue with the project schedule. The buyer benefits because they have less risk of occurring fees and penalties for not closing on time with their lender.  An on-time close is most important in new construction sales. You have signed a performance contract and are required to clo...

What is the single-most-important attribute, skill, or experience required to achieve success in any real estate occupation?   If you answered education, knowledge, experience, or wisdom, you should continue reading.  You can have wallpapered hallways with licenses, certificates, and awards, but this assuredly will not have your phone ringing with business opportunities.  The totality of these attributes will affect your quality of work and the ability to navigate through the maze of daily evolving information that is necessary to participate as a loan officer or real estate agent.   My resume shows accomplishments and awards in the real estate industry that distinguish me as having superior knowledge. My accolades can add legitimacy to why a client would want to use me, but it does nothing if I do not have a client network.   The single-most-important thing is your external network relationships. Your circle or sphere of influence is most importa...

A double edge sword cuts between the tax advantages provided by the IRS and the income required from a lender to qualify for a mortgage.  Qualifying for a mortgage is harder for self-employed borrowers compared to W-2 wage earners. Program guideline rules from Fannie, Freddie, and Penny are applied to determine a borrower's income for conventional or government loans.  There are tax advantages for self-employed individuals or business entities. Unfortunately, self-employed borrowers are at a disadvantage of qualifying for mortgages that offset the benefit of having business expenses or losses. Self-employed borrowers typically show losses on the available IRS tax schedules, and the bottom line is the adjusted income after the business losses. Most often, small businesses provide very little income, and this is the problem.  W-2 wage earners experience the opposite effect. The IRS appreciates the taxes you pay, and verifying income is easier for a mortgage. The gross incom...

  What is an ARM or adjustable-rate mortgage?  An adjustable-rate mortgage, or ARM, is the most misunderstood loan for most people, including those entering the mortgage profession. There are hybrid versions of the ARM that are no longer insurable today after the 2008 financial crisis. The hybrid ARM with interest-only option falls into the non-qualified mortgage product. I will only discuss the ARM loans that are currently available as an insurable qualified mortgage.  The benefit of an ARM for borrowers is the lower rates and payments early in the loan term. Lenders can use the lower ARM payment for loan qualification resulting in a higher loan amount.  Another benefit of an ARM is that more of your payment is applied to the loan principal compared to a fixed-rate mortgage. A fixed-rate mortgage amortized over 30-years has the majority of the interest in the front of the loan amortization schedule. An ARM recasts the loan with each payment, thereby applying more of...

HomePath™ is the program that the Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, uses to market and sell their real-estate-owned (REO) properties.  You have probably heard of Fannie Mae if you are in the market to refinance your home or purchase a home. Fannie Mae is a conventional loan type with a maximum loan amount of up to $548,250 for a single-family residence in the continental U.S.  Fannie Mae does not originate loans. Fannie Mae is a corporation that buys loans from banks and sells the mortgage packaged as mortgage-back security to investors. Fannie Mae guarantees the loans originated to their requirements and will cover the investor if the borrower defaults. When a Fannie Mae home loan is foreclosed, the property becomes known as an REO. The goal is to sell the property in a timely matter to maintain stability in the neighborhood. Fannie Mae's HomePath™ REO homes are listed for sale on HomePath.com, with photos, descriptions, and financing...

 All-time high sales prices have first-time homebuyers priced out of the market. What are the options?  San Diego County has seen home price increases at approximately 16 percent since last year. The San Diego Association of Realtors reports the median sales price of $674,900, and the average sales price is $851,479. Where is the affordable housing in San Diego?  http://media.sdar.com/media/CurrentStats.pdf The obvious answer is that affordable housing in San Diego doesn't exist. Many first-time homebuyers consider moving up the I-15 corridor, north of the Temecula Valley, into the Inland Empire, for lower-priced housing.  Becoming a daily commuter with the rising gasoline prices can be a burdensome consideration. Sure, you can get more for your money, but is it worth it in the big picture?   As a former Bank of America mortgage employee during the 2008 to 2012 financial recession, I am reminded how those areas are the first to drop value. Our Bank of Ameri...

What is the #1 most important advice I can provide for first-time homebuyers?  A positive attitude and action plan are most important. It is too often that first-time homebuyers will become discouraged by the rising sales prices and talk themselves out of a home purchase. Some may cringe at the thought of a daunting and agonizing purchasing experience or disqualify themselves by not having the funds for a down payment. They give up before they ever get started.  Why settle for renting an apartment at the same price you could be spending as an owner? It is all up to you. If there is a will, there is a way. The process may take a two-year plan, but it begins when you commit.  Sitting on the sidelines sucks! Housing prices are up, but interest rates are the lowest in history. Housing affordability factors your monthly payment, figured with a debt-to-income ratio. The current market's low-interest rates are an attractive incentive .  Did you know that there are areas wit...

What Happened to Jumbo Non-Qualified Mortgages?    All of the jumbo non-QM products evaporated by late March 2020, due to investors concerns of instability in the secondary market created by the Covid-19 global pandemic. This episode was a haunting experience for those in the non-QM loan market as it resembled the 2008 mortgage crisis.  Pipelines of non-QM loans had no chance of funding. Most reputable non-QM lenders sent their customers a formal statement with an apology and letters of explanation for their decision to exit the market. The actions were very little help for the Account Executive's relationship with the mortgage lender or the mortgage lender's relationship with their customer.  Presently, non-QM investors have re-emerged with an appetite, non-QM loans are back. However, they are back with more stringent program guidelines. The "make-sense" underwriting policies have changed to "make-sure" underwriting policies.  IMN provided an informative Q...

Will history will repeat itself?      The financial crisis in 2008 was a life-altering experience and the most-important event in history for anyone to know in the mortgage industry. The U.S. economy was at risk of a complete collapse placing the world economy at risk. Millions of Americans lost their homes, businesses, and employment during the greatest depression in our history.       The Troubled Asset Relief Program (TARP) on October 3, 2008, kept the nation's banks operating during the financial crisis. The government bailout became the most successful and most hated in U.S. history.          Panic: The Untold Story of the Financial Crisis of 2008, provides the factors that led to the 2008 financial crisis and the efforts made by former Treasury Secretary Henry Paulsen, Federal Reserve Bank of New York Timothy Geithner, and Federal Reserve Chair, Ben Bernanke, to save the United States from an economic collapse....

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