Home > Blogs > John's Blog
2,051 views

John's Blog

By John Meussner | Mortgage Broker
or Lender in Costa Mesa, CA
  • Oh, you're a SENIOR loan officer?

    Posted Under: Home Buying in Hockessin, Financing in Hockessin, Agent2Agent in Hockessin  |  August 28, 2013 1:59 PM  |  408 views  |  4 comments

    From Dictionary.com:

    sen·ior, adjective


    1) older or elder (designating the older of two men bearing the same name, as a father whose son is named after him, often written as Sr.  or sr.  following the name): I'd like to speak with the senior Mr. Hansen, please. I'm privileged to introduce Mr. Edward Andrew Hansen, Sr.  
    2) of earlier appointment or admission, as to an office, status, or rank: a senior partner.
    3) of higher or the highest rank or standing.
    4) in American schools, colleges, and universities) of or pertaining to students in their final year or to their class.
    5) in certain American colleges and universities) of or pertaining to the final two years of education, during which a student specializes in a certain field of study.

         When I meet a colleague in the mortgage industry, we usually discuss how long we've done the job - most people in this business are at least somewhat fresh - the majority don't make it to 'seasoned' status from what I've seen.  For that reason, I often find myself shuddering when I get a business card or email - HUH?!?  SENIOR loan officer?  Is my memory failing me?  I thought they said they just started 2 months ago?

     
     
        When I started in the business, I received that same bright, shiny new title my first day - SENIOR loan officer.  Wow, I thought, they must think highly of me for that kind of verbiage - but, where are all the junior loan officers?  Why is that sluggish guy who spends his entire day on espn.com and closing 1 deal a month also a 'Senior' loan officer?

     
        Quickly, I realized EVERYONE in the industry was a SENIOR loan officer.  Also quickly, I quit that job title and became what I am today - a mortgage consultant and, officially, MLO.  Perhaps someday, when my hair's a little grayer (fingers crossed I still have hair to see the day!) I'll take on the Sr. tag.

     
         What it really boils down to is over-promising and under-delivering, a practice that really needs to go away. Yes, you know when a potential client sees "Senior Loan Officer" they may assume you know more than if your title was "Brand-new, green, naive, still-learning-how-to-spell-MORTGAGE" loan officer, but what about the 25 year industry veteran (deservedly) using the same title?  You're doing them & the industry a disservice. 

     
         If you just graduated from law school and got a job running errands for a big shot attorney, would your business card and introduction state "Senior Partner"?  Why is it any different?  To me, at least, it seems at least unprofessional, at most blatant false advertising.

     

         So STOP IT!  Shakespeare said it best -  "To thine own self be true" - if you're new to the business, then darn it, proudly rock that "Loan Officer" or "MLO" stamp on your business card - let the world know you're brand new and busting your butt to become the very best.  Everyone starts in the same place and it's nothing to hide.  If you'll overpromise on your experience and knowledge, what else will you overpromise and underdeliver on in your business?

  • When can I get a new mortgage after a short sale?

    Posted Under: Home Buying in Hockessin, Financing in Hockessin, Foreclosure in Hockessin  |  August 13, 2013 2:56 PM  |  454 views  |  3 comments

    How long after a shortsale can you get a mortgage? 

     

       I've been getting this question a lot recently - as well as this questions' cousins...how long after a foreclosure?  A bankruptcy? 


       There seems to be a lot of confusion about when someone is eligible for a new loan, so I put together the chart below as an easy reference.  A couple of things to note, though - there is always the possibility of exceptions due to dire circumstances (death of primary wage earner being one of the most oft-granted exceptions) though exceptions to these rules are pretty rare.


       In addition to the seasoning requirements, applicants must also meet all other credit requirements such as FICO score, down payment, and debt/income ratios.  Credit is also scrutinized a bit more after a bankruptcy - a 30 day late is much more of a red flag to an underwriter after a BK, so it's important to keep your credit report as squeaky clean as possible after one of these events.


       Dates for the seasoning are generally based on the end of the event to the new purchase application date - for example, the clock starts when a bankruptcy is discharged, not when it's filed, and runs to the mortgage application date, not the settlement date on a new home.


       More questions about life after foreclosure, bankruptcy, or a short sale? 
    Ask an Expert!

     


       
      Conventional FHA
    Bankruptcy 4 years 2 years

    Foreclosure

    7 years 3 years
    Short Sale

    4 years (potential exception for less

    if sold agency-direct)

    3 years (potential exception for less)

  • Thats Impossible! (aka...we can't do that)

    Posted Under: Home Buying in Hockessin, Financing in Hockessin, Home Ownership in Hockessin  |  March 28, 2013 11:40 AM  |  439 views  |  No comments

    "I thought we couldn't do that because of ________?"  The words of a client that has been misled, intentionally or unintentionally, by a mortgage 'professional'.

    There has been a lot of legislation put into place to weed out the 'bad guys' of the mortgage world over the past few years, and for the most part it's been an effective measure in cleaning up the industry, but as the comedian Ron White says, "you can't fix stupid".  In this case, ignorant might be a better word. 

    Many clients come to me after being turned down by another bank, told "you can't do that", or being offered ridiculous rates/terms elsewhere.  This is often a result of a new loan officer not being well versed in the lending landscape, and sometimes a seasoned loan officer that just doesn't know anything outside of their normal stream of business or niche.

    Recently, I had a very good friend come to me for some refinancing advice after their current lender offered them some pretty poor refinancing terms.  My friend is eligible for the HARP program since their loan is well seasoned & owned by Fannie Mae.  According to my friend, he was told "you can't do that" (referring to the HARP program) because his loan has lender paid mortgage insurance.  While it may be true that some lenders don't allow for HARP w/LPMI transfers, that's not true for the entire mortgage industry.  His current lender instead offered to split the first and second mortgage, resulting in a high(er) interest first mortgage and an interest-only, adjustable rate second mortgage, resulting in a savings of about $50/month.  $50/month savings, and part of that is from applying a portion of the balance to an interest-only loan?  HUH!?  That hardly seems like a benefit to anyone, especially a client whose main goal is to pay off their loan faster and save overall interest costs.

    After a little research of our loan programs, turns out he COULD "do that", as we can transfer lender paid mortgage insurance from most PMI companies with the HARP program - the result in this case is a savings of several hundred dollars each month with the HARP program, a low rate 30 year fixed first mortgage...and all with a program that allows a quick process with no appraisal.

    So, fellow loan officers, a change of verbiage is in order - rather than "YOU can't do that", we should be using the words "WE can't do that" a little more often.  While we're not bound by a fiduciary duty, I'd like to think the ethical thing to do if you know another lender or program is available outside of your offerings that would offer someone a much greater financial benefit....is to direct them to the right place.

    If you cannot help someone and aren't sure if there is another program out there that can, go ahead and offer what you have, give em your best shot, but don't tell someone "That's impossible!" because when they go elsewhere and are told "YES YOU CAN!" your credibility is destroyed.

    I'd rather be on the receiving end of a 'thank you' for directing someone to the right place than risk my credibility trying to push a loan program with no benefit on someone with the words "YOU CANT!" or "THATS IMPOSSIBLE". 

    Lenders - just because YOU can't do that, does not mean it can't be done!

  • Is your credit good, or just good enough?

    Posted Under: Home Buying in Hockessin, Financing in Hockessin, Credit Score in Hockessin  |  March 19, 2013 4:29 PM  |  457 views  |  No comments

    Is your credit good or just good enough?  Do you know the difference and how much of an effect it can have on your finances?


    Most of us know that having terrible credit can exclude you from getting a loan.  Many of us also know that having lower credit scores results in higher interest payments and fees for things like credit cards, auto loans, and mortgages.  Is your credit good enough to get a loan?  If so, is your credit GOOD, or just GOOD ENOUGH?  Does it matter?  Let's take a look...


    Have a 660 FICO score?  Not bad!  Not considered perfect, but considered a decent score.  You could certainly get some loan options based on that score.  BUT - would getting your score higher be worthwhile?


    Let's take a look at the numbers, just on a mortgage loan -


    The difference between a 660 FICO score and 725 FICO score will generally result in about a half percent change in interest rate - for this example, we'll use 3.625% for the 725 score and 4.125% for the 660 FICO.


    $200,000 loan amount, 30 year fixed rate mortgage -


    725 FICO, 3.625% interest rate
    Total finance charge over life of loan = $128,360 in interest

     

    660 FICO, 4.125% rate
    Total finance charge = $148,947 in interest



    Taking that FICO score from good enough to really good would save about $20,000 in interest over the life of a loan - and that's just a single 30 year mortgage - Now factor in all of the car loans with higher rates, credit cards with higher rates, and higher insurance premiums along the way - we're talking a LOT of money.


    Also, most home buyers these days don't have 20% to put down  and thus rely on mortgage insurance to allow them to buy a home with as little as 5% down (for conventional loans).  Well, guess what else also takes FICO scores into consideration for pricing?  Yep, that PMI can be pricey depending on your credit score.


    For the same $200,000 loan above, a borrower with 5% down would see the following:


    660 FICO - $200/month mortgage insurance

     

    725 FICO - $111/month mortgage insurance -  $89/month savings, or more than $1000/year!

    It's important to remember that until you (and your clients) credit scores are above the 750-760 range it's always a good move to try to get them higher - credit repair is NOT just for people with poor credit.  Credit repair is also not always a long, tedious, process - sometimes it's as simple as a few simple fixes or updates.

    Click here for an article on how the difference between poor or OK credit and perfect credit can cost someone in the ballpark of $1 MILLION in their lifetime.

     

    When having excellent credit can save you a ton of money, don't settle for good enough!

  • My Facebook Business Page

    Posted Under: Home Buying in Hockessin, Home Selling in Hockessin, Financing in Hockessin  |  February 27, 2013 4:25 PM  |  315 views  |  No comments

    So I'm a little behind the times, but I've (finally) began spending some time putting together and keeping up with my facebook business page.  I would imagine most of the people reading this also have Facebook pages (and twitters, and linkedIN, amongst others) and it made me wonder a couple of things. 


         What do you use facebook for most? 


         To kill time?  Keep up with friends and family?  Marketing?  Games (God, I hope not)?


         Has social media been a benefit to your business or a time waster?

        

         I see my facebook business page as a platform with an unlimited capacity regarding an audience to combine information with a little bit of fun.  Since it seems everybody and their mother --literally-- is on facebook, it's a simpler way than keeping up with an email list or a CRM system.  Want to see updates on what's happening with mortgage marketing?  'Like' the page and you'll get the updates.  But how boring would that be if that were all the page was?  I also plan on having a little bit of fun, helping others, and giving something to those that help me from time to time.

         How do you build your audience?  I decided to offer a fun incentive - if I can get to 100 'likes' by the end of next week, I'll send out a $25 Amazon gift card to a random person on the page (my girlfriend will be picking randomly so it's objective).


         Hopefully the page will be a place to bounce around idea's, discuss both the local market and real estate/mortgage industry as a whole, and a way to get to know like-minded people.


         If you'd like to check the page out and get mortgage market updates, real estate tips, info to help your business, and have a chance to win something fun from time to time, stop by (click the facebook icon below or go here).


         If you currently have a facebook business page, what type of info do you primarily put on it?  How did you build your audience?  If you don't have one, why not?

  • Major (bad) Changes to FHA loans

    Posted Under: Home Buying in Philadelphia, Financing in Philadelphia, Credit Score in Philadelphia  |  February 6, 2013 10:41 AM  |  390 views  |  No comments
    Over the past couple years we have grown accustomed to the cost of FHA mortgages growing more expensive as HUD decides it's mismanagement of money needs some help from home buyers.  This has infuriated me since day one, since the very purpose of the FHA loan program is to help low- and moderate-income people obtain the American dream of home ownership -  I would imagine there are better ways to raise money than to take it directly from the pockets of the low- and moderate-income demographics?  I digress...

         The most recent change could well be the nail in the coffin for the FHA loan program...or at least it should be.

         For all case numbers issued on or after June 3, 2013, the monthly mortgage insurance for the VAST MAJORITY of FHA loans will remain in place for the life of the loan term.  (In reality, this is the case only for mortgages with less than 10% down/equity....but in reality, how many FHA buyers do you see putting 10%+ down?) 

         You've cut your loan balance in half and your home has doubled in value since you bought it?  They don't care, you're going to keep paying that PMI.

    The actual break down of loans and how they're affected is here:

         This might not seem like a huge deal to those of you who may be thinking "well they can just refinance once they have 20% equity", and to an extent you're right - but when (if?) the unemployment rate drops and the economy sees an improvement, we're going to see a pretty steep increase in interest rates to offset inflation - when that happens, the options for people with FHA loans will be limited to a)a higher rate or b)PMI forever...neither is very appealing.

         What does this mean to you as a real estate agent?
    You need to advise your clients that having a higher credit score and a slightly higher down payment will save them a TON of money by allowing them to go with a conventional mortgage VS an FHA loan.  The cost of credit repair is nothing compared to the cost of mortgage insurance over 30 years.

         What does it mean to a person buying a home?
    Either buy a home as soon as possible, before these changes take place, or educate yourself, find out your credit score, and see what you need to do to qualify for a low interest-rate conventional loan, where the PMI is cheaper AND you can cancel it once you reach a 20% equity position.

  • Small differences in credit = BIG differences in mortgage costs

    Posted Under: Home Buying in Philadelphia, Financing in Philadelphia, Credit Score in Philadelphia  |  January 30, 2013 5:06 PM  |  346 views  |  No comments
    Calculating PMI (Private Mortgage Insurance) on a home loan can be a sticky area for some Realtors and even some inexperienced loan officers.  There's no easier way to lose the trust of a client than to under-estimate costs of a transaction, and PMI is one area where it's really easy to do so.  While many agents do a great job of estimating costs on their own, it leaves the door open to errors and the possibility for less than happy home buyers - it's a much better option to include a loan officer in that conversation.

         Everyone has caught up with interest rates being different for different credit scores, but not everyone is aware just how much the cost of PMI can vary with just minor changes in someone's FICO score.  It used to be if you had great credit, you'd get a great rate on your interest and PMI.  Now?  Let me see the credit score.  You're sure you've never been late on anything and you have great credit?  Still, let me see the credit score.

         Lets take a look at how much just a 21 point difference in credit score would effect a buyers costs, based on a very realistic example using todays interest rates: (Note : Each example is based on a $300,000 purchase price with 5% down - effectively a $285,000 loan amount - with a $799 underwriting fee, $16 flood cert, $20 credit report, and $800 in title company charges, conventional 30 year fixed loan product)

    Scenario 1 - 719 FICO score
    3.875% interest rate (3.922 APR)
    .94 PMI factor (loan amount x .94% /12)
    $1563/month principal/interest/PMI

    Scenario 2 - 720 FICO score (yes, 1 point higher)
    3.75% interest rate (3.783 APR) WITH $500 lender credit toward closing costs
    .67 PMI factor
    $1479/month

    Scenario 3 - 740+ FICO
    3.625% interest rate (3.657 APR) WITH $500 lender credit toward closing costs
    .67 PMI factor
    $1458/month

         As you can see, all 3 of these borrowers have excellent credit and likely no delinquent payments, at least not in their recent futures.  Sometimes a score can fluctuate this much based on just a few hundred dollars of credit usage, and in the above example could cost more than $100/month.

         This underscores the importance of using a loan officer that can not only calculate an interest rate and PMI correctly, but also one that is very well versed in credit scoring - if a clients FICO score is just under a different rate or PMI factor, it's important to know how to get those scores up ASAP!  Are your clients making it to the closing table with the best possible rate and loan terms, including the lowest possible PMI?

    Content By: John Meussner, NMLS ID 138061
    Visit my website at http://www.jmloans.com

 
Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer