Mortgage product fundamentals – part 1

Once again, Coldwell Banker Mortgage Advisor Steve Nimmer NMLS # 186680 ph. # 912-604-3834 comes through with a great article to share.

Useful information you need to make an educated decision. And if you live in the Savannnah, GA MSA and are ready to buy give me a call 912-352-1222.

Conventional Loans

Conventional loans are the most traditional type of financing for a home purchase or refinance. Conventional loans are underwritten by government-backed enterprises, including Fannie Mae and Freddie Mac, and have their own set of guidelines (see Eligibility below).1

 
Benefits

Individuals with good credit, a steady income and who can afford the down payment on a conventional loan can take advantage of a number of benefits:

• competitive interest rates, typically lower than FHA, VA and jumbo loans,
• faster mortgage processing in most cases,
• avoiding private mortgage insurance if the borrower puts 20% down,
• building equity faster.

Eligibility

Borrowers must meet several criteria for conventional loans including demonstrating stable employment and having a maximum debt-to-income ratio of less than 33/45 (a borrower's mortgage payment cannot exceed 33% of their gross monthly income and total debt/obligations cannot exceed 45% of their gross monthly income). They also need good to excellent credit, specifically, FICO scores of 620 or above. Larger down payments are also required for conventional loans between 5%-20% of the home's sale price for the down payment plus additional cash/savings for closing costs.2


Mortgage Types
Fixed Rate Mortgages: A fixed rate mortgage is an option for conservative borrowers, those who want to lock in near historically low rates and homeowners who plan to stay in the home for a long time. With a fixed rate mortgage, interest rates remain static, and the borrowers' principal and interest payment will remain the same for the term of the loan.³ Fixed rate loan terms are generally amortized over 30, 20, or 15 years.

 Adjustable Rate Mortgages: Conventional adjustable rate mortgages (ARMs) can be beneficial for borrowers who don't plan to live in the home for a long period of time, or when mortgage interest rates are high or increasing. ARMs begin with lower initial interest rates and monthly payments; however, after an initial fixed period, the interest rate will adjust. (Most ARM rates are tied to the performance of one of three major financial indexes.)³ This type of mortgage is often considered by borrowers ARMs typically offer initial fixed-interest periods of 3, 5, 7, or 10 years.

 Sources:
1.Conventional Loan vs. FHA Loan by Karina Carrillo Hernandez
2.Conventional Home Loans Explained by Daniel Duffield
3.Adjustable-rate Mortgages by Realtor.com


A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Taking the mystery out of the mortgage process, part 2

To continue the discussion about mortgages from the previous blog post, Steve Nimmer, Coldwell Banker Mortgage (912-604-3834 NMLS #: 186680) emailed me more information.

What happens behind the scenes after closing?

• Warehousing: About 10 days after closing, the lender uses their warehouse line to finance the new loan until it is "sold" to an investor on the secondary market.

• Secondary market: Allows lenders to sell mortgages to investors, providing them with new funds to offer home loans to new borrowers. Your customers' mortgage rates are influenced by the yields demanded by these investors.

Typical investors of mortgage-backed securities in the secondary market include:

• Fannie Mae and Freddie Mac for conventional loans
• Ginnie Mae for FHA and VA loans
• Insurance companies, pension funds and private investors

• Shipping and delivery: Once an investor is secured, the loan is packaged with other loans and applicable documentation and becomes part of a mortgage-backed security (MBS). These mortgage-backed securities are then delivered to the investor. 

• Loan administration/servicing: A loan servicer takes care of the administrative duties once the mortgage-backed securities are delivered to the investor. This includes: customer support, collection of mortgage payments, management of escrow accounts and fund recovery efforts.

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Taking the mystery out of the mortgage process

The more CRE work I do, the more phone calls I get about residential real estate. Maybe these inquirers are getting burned by residential agents?? I don't know. 

The answers to a recent question about residential mortgages have been provided by Steve Nimmer (912-604-3834 NMLS #: 186680) with Coldwell Banker Mortgage. I also refer a lot of business to Kirsten Ray with IKON Financial (912-313-4128)

Phase 1 – Origination:

This begins the mortgage process and is actually several steps. The loan officer will help the customer learn what their mortgage financing options are through a pre-qualification process, and assist with filling out a loan application and gathering the necessary documents.

Customers should know: They'll need to provide income, asset and debt information, and their Social Security number to allow the lender to pull their credit report.

Phase 2 – Processing:
The loan processor will then collect, verify and review all required documentation provided by the buyer, order appraisals, order a title search and send all this information in a complete package to underwriting.

Customers should know: Processors will be checking for errors, discrepancies and possible missing information, so customers need to understand how critical it is to provide accurate, complete information in a timely manner.

Phase 3 – Underwriting:
The underwriter analyzes the documentation for accuracy and evaluates the customer's ability to repay the loan based on their credit and employment histories. An appraisal and title review is completed to ensure the loan program guidelines are met, the title is clear, and to determine risk acceptability.

Customers should know: This is "decision time" as the underwriter weighs the risk of lending money and approves or denies the loan – so customers may be asked for additional financial information even at this stage.

Phase 4 – Closing (or Escrow):
The loan processor coordinates all aspects of the closing with the buyer and the closing agent and/or attorney. The closing agent conducts the closing, ensures that all necessary documents are signed, assures closing fees and escrow payments are made, and confirms that all documents are sent out to be recorded according to state and local requirements.

Customers should know: Before closing they should receive information explaining the closing costs, including a standardized Good Faith Estimate (GFE) of how much cash they will need at closing.


A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Crazy low interest rates!

‎3.975% interest rates with 1 point origination fee for credit scores 680+ on loans $100K with Coldwell Banker Mortgage!! Rates are subject to change at any time.

A. Joseph Marshall
Commercial Real Estate Agent
Savannah, Ga.