Basic Mortgage Information Every Real Estate Professional Should Know!

By
Services for Real Estate Pros with Exit Beach Realty BK645709

Are you well versed in mortgages?  You should be, the mindset "Its not my job man" really has changed! If you want customers...you have to know your business.  Even if mortgages are not your level of expertise, don't you think your customers will benefit by what you know?

 

Recently there have been many issues that have come up across the nation...issues that need to made public...issues that if the customer understood in advance...issues that would not cost a professional....their time, there energy and their reputation. 

In most instances more transactions would close because of the better understanding of the entire process, while other's would never get started because these buyer's would in fact not be buyer's due to the new guidelines.

I am not that different from a consumer...some of the language is just over my head.  When it comes to mortgages...

I need it broken down for me...broken down in the language that I understand, a language consumers would understand.

Recently FannieMae changed some guidelines...it's not just our market...it's the "DECLINING" Markets..

Fannie Mae Definition of a declining market:  A declining market is one in which home pricesare currently declining, as determined by the tracking of home prices in a certain geographic location. 

This is determined by zip code through the Declining Market Indicator tool.

 

When a property is identified, a 5% loan to value (LTV) reduction is required from the maximum financing allowed per the applicable product. 

All conforming conventional and jumbo mortgage products apply.

So if someone qualifies for 100% financing and its in a declining market based on zip code...it is no longer 100% financing as the buyer will in fact have to put a 5% down payment. 

It can affect investment properties as well as primary residence's increasing the down payment to an additional 5%. 

If the zip code does not indicate the property is in a declining market but the appraisal states declining market...these guidelines will apply.

It makes perfect sense as a Real Estate Professional to understand the basic mortgage information

We have to speak the language of the consumer...so they understand! 

So go back call your loan officer's get an education...help yourself...help the consumer!

If you would like to know if you are in a declining market based onFannieMae guidelines contact your Mortgage Professional...also there is great information for all on www.efanniemae.com.

P.S.  FHA and VA loans are not affected by the declining market policy.

Disclaimer: The opinions expressed by The Activerain Network and it's members and those providing comments are theirs alone, and do not reflect the opinions of Midori Miller and CENTURY 21 Sundance Realty. Midori Miller and CENTURY21 Sundance Realty are not responsible for the accuracy or content provided by The Community.

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Rainmaker
89,047
Rick Kellow
Cherry Creek Mortgage - West Bend, WI
FHA & Reverse Mortgage Expert

very nice thank you... very pro...

Rick

Feb 11, 2008 10:51 AM #46
Rainer
13,248
Michael Schindler
Your IRA guy! - Galesville, WI

And lets not forget-as Midori said.....FHA and VA aren't subject to the 5% modification-nor are they currently affected by the risk pricing that is coming out (or is already out).

The best way to combat the obstacles both realtors and mortgage people come across is to head it head on and try to always have a back up plan in place!.

One of the best things to do now for the current and future markets is to learn about the credit score-it's become perhaps the most important factor in home qualifying.  I see a lot of information on the web regarding credit bureau's and credit scoring that is just plan wrong......the credit scoring model isn't a perfect science by any means but, right now, it's all we have.

Michael

 

Feb 11, 2008 10:06 PM #47
Rainer
5,036
Charles Dismuke
Amerifund Lending Group - Palm Springs, CA
Palm Springs Mortgage Guy

Man Midori,

I have to learn how to write a blog like this one.  Clear, concise lots of pics and information.

 Awesome!!!  Can I call you and learn?

Palm Springs Mortgage Guy, Charles Dismuke

Feb 12, 2008 07:06 PM #48
Ambassador
1,801,535
Barbara-Jo Roberts Berberi & Corinna Birgit Cromartie
Charles Rutenberg Realty - Palm Harbor, FL
Palm Harbor & Dunedin FL Residential Real Estate
Midori - indeed, all agents should have a firm grasp of these terms! great post!
Feb 13, 2008 08:33 AM #49
Rainmaker
207,132
Dee Nofziger
|Key Realty | Maumee Toledo Real Estate Blog - Toledo, OH
Maumee Real Estate, Toledo Homes, Key Realty
My in-house lender is having an educational get-together after our sales meeting next week to specifically educate the agents in my office with EXACTLY this. I have found recently that it is much easier to create an atmosphere of loyalty with a buyer (and seller) when you can speak intelligently about current lending trends. And by "current", I mean 5 minutes ago, it seems.
Feb 20, 2008 01:19 AM #50
Anonymous
Anonymous
Lending rules are changing daily.  So, it's smart for realtors to keep a pulse on the mortgage industry and at least have a basic understanding of mortgages.
Feb 29, 2008 06:23 PM #51
Rainer
5,378
Jennifer Lamm
The Loan Gallery - Sunland, CA

Very good information.  I am really happy to see the 51 responses that you got from the realtors.  Whenever I start talking mortgages with some realtors they don't seem interested.  I love to work with the ones that do care so that we can work together as a team.  That is what is best for the client.  Non confliction of terms when they are trying to make decisions.  Great Post!!

 

Jennifer Lamm

Mar 14, 2008 08:16 PM #52
Rainer
55,863
-- Casey Brischle
Columbia Bank - Spokane, WA
Spokane Home Loan Mortgage Professional
nice little read packed full of great info.  nice post!
Mar 18, 2008 03:47 PM #53
Rainer
5,280
Money Tree
Money Tree Financing Group, LLC - Lawrenceville, NJ

Hi Midori,

Excellent post !! Thanks for the information. 

 

Mar 21, 2008 10:21 AM #54
Rainmaker
1,449,025
David Saks
Memphis, TN
Hi Midori. The changes in financing that we're seeing seem to tread some, ECOA, RESPA or fair housing issues. Not that I'm implying that anyone is moving in a negative direction, but when a loan characterisitic is changed because of a zip code it seems as though the opportunity for redlining might indeed be thinly disquised in some areas, especially if the borrower has a 795 FICO. Has Fannie Mae opened the door to a vile situation that just won't sit well, with either lenders or borrowers, whereby refusing the loan based on zip code is taking place in an area that has already been demographically marked for minority disparity by community development centers working to support efforts for affordable housing? Or is it that creditworthiness has to suffer because of foreclosure, devolution and other market conditions? It's just two questions. I have thousands.
Mar 26, 2008 11:09 PM #55
Rainer
2,036
Nathan Rodriguez
New Wave Lending Corp. - Akron, OH

Great post.  What most real estate agents and consumers do not know is the severity of our dynamic market.  The market changes so frequently that it makes even the most seasoned professional second guess themselves.  It is more important than ever to coach your buyers to accept financing and run with it.  The media does not help the cause by categorizing a small group of shady characters into a larger group of professionals.  Thank you for being involved.

 

 

Mar 28, 2008 05:21 PM #56
Rainmaker
196,548
Doris Freeman
RE/MAX REALTY SOURCE - Jackson, TN
Broker/Agent, Realtor, Madison-Gibson-Crockett
You defiantly need to know and counsel your client then turn it over to the lender, but if you don't know what the lender is doing or talking about you and your client are going to have a problem, especially if you haven't chosen the right lender.
Mar 30, 2008 06:30 PM #57
Rainer
28,523
This Account No Longer Exists
Inactive Account - Woodstock, VA
I like the post and understand the thought process of it, however, i feel that with all of the changes taken place, we don't want a realtor selling a loan . Please don't take this the wrong way, it is great information to know what's going on with the market but even with a declining market you can purchase homes doing 100% financing with some lenders and they are honoring it until May 1st. We don't want you to pre-qualify clients or turn away business because they don't have 5% down. In my opinion, i don't see this lasting more than 1 year and when the 100% loan comes back in full strength, i am going to want to contact that buyer asap to let em know. If the realtor says, sorry, you don't have 5% save some money and call me back than we all lose.
Mar 31, 2008 02:31 PM #58
Rainer
22,420
John Cashion
New Penn Financial - Dover, DE
Well written post. The undewiting guidlines are changing on a daily basis. Kinda like trying to hit a moving targert. Thanks for the info!!
Apr 09, 2008 06:05 AM #59
Rainer
18,362
Matt Odell
GVC Mortgage - Carmel, IN
FHA, Conventional, USDA and VA Loans!
This is why all realtors should have a capable and honest friend in the mortgage business.  If not 5 or 20.  You can't always be on top of everything in your field and someone elses.  That is why it is good to have someone like me to call with questions that may come up.  I hope you have a friend in the business!
Apr 21, 2008 02:54 PM #60
Rainer
109,624
Karen Luke
South Metro Property Management, LLC - McDonough, GA
Henry County Real Estate

This post could go down in every realtor's book about what they didn't learn in real estate school. Thanks Midori.

Apr 23, 2008 12:19 PM #61
Rainmaker
214,388
John Thomas
Primary Residential Mortgage Inc. - Newark, DE
First Time Home Buyer Expert

It Shocks me how many agents show buyers home and they don't even have a pre-approval letter from the buyer.  I had an agent send someone to me who wanted to buy a $900,000 home and only wanted to spend about $1200 a month on the mortgage and had $30,000 to put down.  Why didn't the realtor say there is no way that is going to happen, it is basic math.  The taxes were $12,000 a year!

John Thomas - Certified Mortgage Planner

May 03, 2008 08:38 AM #62
Rainer
9,806
Simon Rosenzweig
Real Estate and Marketing - Lakewood, NJ

At the center of every residential real estate transaction is an individual or a family that is emotionally charged-excited, probably a bit nervous and definitely stressed about timing. 

Whether you're an attorney, a lender or a home buyer, the last thing you need is an unexpected delay at closing.
 
When you choose Madison Title you can be sure that we will process the title work correctly and as quickly as possible. That's our contribution to a smooth, timely closing.

What's more, we work with you, answer all your questions and walk you through the process. So there are no last-minute surprises at closing.

 If you're a home buyer looking for more information about title insurance, feel free to email me at srosensweig@madisonspecs.com or you can visit our website at www.madisontitle.com

Take the step, to a stress free closing.

I am here for you.

Simon Rosenzwieg

Jun 12, 2008 10:38 AM #63
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Cindy Marchant
Keller Williams Indy NE 317-290-7775 www.marchantteam.com - Carmel, IN
"Cindy in Indy" , Realtor, Fishers Real Estate

I'm quite late in responding, but think your post is so relevant right now.  I have seen so much more FHA, specifically Ameridream options being used as the sub prime market has disappeared.  There are still good buyers out there that have had some bad luck with job loss or medical issues that are stable but can't qualify for a conventional loan.  My lenders have been FHA savvy so I appreciate their guidance with these types of buyers. 

Your post makes me think about the declining markets, the declining S & P, the rising gas prices....all of it makes for a rough time ahead.  I'm sure there will be a quite a fall out of real estate agents as a result and the strong will survive.  Here's to seeing all of you on the other side!

Jul 06, 2008 01:38 PM #64
Rainer
73,920
Sarah Eubanks
Hill Valley Financial Services - Oregon City, OR
Preferred Oregon Loan Consultant & Notary Public

Midori,

As a mortgage professional, I would love to educate the Realtors in y area on the changes and the overall state of home financing. 

I would also like to learn more about the side that Realtors are working with in the current market.  The more knowledge we have the better we can all be!

Thanks for the post...

Jul 30, 2008 11:20 PM #65
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