The Federal Housing Administration was developed back in 1934 and did not become part of the housing of urban development until 1965 and at the time the housing market was flat as could be. Hundreds of thousands of people were without work and having to take jobs for less money which made home ownership seemingly impossible before FHA that is. For you folks that feel like it is hard to get approved for a loan today check this out. Most of these loans were balloon payments after a short 3-5 years and max of about 50% loan to value. Before this folks were mainly renters as a matter of fact only 4 out of every 10 households owned their homes.In the year of 1940 FHA had a main focus and that was to help returning veterans coming home from the war get into homes. In the 1950s, 1960s and 1970s, the FHA helped to spark the production of millions of units of privately-owned apartments for elderly, handicapped and lower income Americans. When soaring inflation and energy costs threatened the survival of thousands of private apartment buildings in the 1970s, FHA’s emergency financing kept cash-strapped properties afloat. The main reason I want to start with this was to give all you folks an idea that FHA is here now just as it was 75 years ago!! The main reason why I wanted take a few minutes and give you some history to FHA is for your to truly appreciate what I do for people you should understand that this loan has weathered many housing market storms over the past 75 years and it will continue to do so but at times underwriting guidelines get strict and sometimes loosen up like right now. So for you folks that feel like you can’t be helped you may want to call or email me instead of taking upon yourself and guessing.
Archive for the ‘FHA Mortgage’ Category
The Inception of the Federal Housing Administration Part 1
Tuesday, August 23rd, 2011Diversification!
Monday, August 22nd, 2011Off the topic of Direct Marketing I have been thinking of alternate ways for LOs to make money while you grind this thing out. You don’t even have to change much about what you do EXCEPT WORK A LITTLE HARDER for your potential borrowers and TURN DOWNS!!!
Think about this for a second……We are all taking more applications now than we have in the last couple years but for most it’s the qualifying the prospects that is the issue. I talk to so many Loan Officers and Brokers a like that just throw that stuff away…….WHY WOULD YOU DO THAT? Your trash is another man’s treasure and actually its a treasure to you but most just don’t know it yet.
Here is what I would be doing if I was a full time LO….
Do which ever marketing I like best and then really really WORK THE LEADS! Work the potential Refi to the bone until there is absolutely no deal there. On all the turn down leads we have all got to start helping these people. There are other ways that may require any Loan Officer to get out and network to help the homeowners in other financial ways….
I would try building relationships with other professionals in other lines of finacial services….
First- credit repair companies–I know most of them pay you a commission for the repair job and then they send you the borrower back for the loan after things are fixed. You not only go the extra mile for your client but you also make a little money on the side form the CR company. This helps you help a client that needs it and that gives you the chance to put them in your client base for later as well as earn referrals through them.
Another example would be to learn loan modification. 9 out of 10 applications taken DO NOT qualify for a loan, so in my mind you should try and modify their loan with their current lender and make a small commission for HELPING your client. Again this was a turn down before and it could be turned into revenue and maybe even a future deal and more than likely a referral or two for another modification. (you would not believe how much home owners talk about not being able to refinance with each other) If you go the extra mile on either of these two ways or even debt settlement or something like that you will be helping home owners the same way, FINANCIALLY, and still be making money as well as building your client base for future. Some of these companies are set up differently so finding the right one for you can be difficult. I have done extensive research on this and if you would like information you can email me off the board for the names of the companies I would suggest using.
Sorry to go off on a rant but i see so many people complain about turn downs and lenders not lending to hardly anyone, but really they should be trying to figure out how to try and help these clients out. There is a lot of money to be made rehabbing or modifying loans as well as credit repair and settlement. START DIVERSIFYING IF YOU WANT TO LIVE AS WELL AS YOU MIGHT HAVE IN YEARS PAST IN THE INDUSTRY! Especially considering some of the people you all run into can’t even modify because they are too far upside down. Another GREAT way to build Realtor referrals for short sales. You simply can’t loose if you build yourself a network of industry professionals to send your turn down and bail out deals to. Net working has never been easier with over 95% of all home owners in need of some sort of financial service. You area already taking the time to talk to them to find out about the refi…if you turn over just half your turn downs you not only cover part of your over head but you also build your clients for later. We know lenders will lend again at some point. he who has the biggest over all client base will be the one who makes the most money when this happens.
I’m in hopes this message gets at least one person motivated again, all the negativity does get overwhelming after a while and there truly is a ton of money to still me made in financial services. Lets get on it!
How Increasing Gas Prices Will Help You Get Those Deals Closed!!
Wednesday, May 21st, 2008This is a very popular subject where ever you may live. I use this as a sales tool and it helps sometimes. If I can save someone an extra $150.00 per month doing a rate and term refinance that may get blown off by some customers but now they see that as an extra few tanks of gas!!
I know this may seem trivial but it works. Keep this in mind because I deal with FHA for about 95% of my total loan volume for the past several years I see folks that have real need to save money.
The majority of them are very thankful to save that money and not being stuck in a sub prime loan even though that may be what they had before we spoke. I wanted talk about the gas prices with you guys/gals because I feel if you work it right it will help you connect with your clients and it may even give you a reason to call some of your past clients.
Stay tuned for my next update and we will continue to explore more opportunities with FHA and how to help close those deals!! Here is what I do when I can show my clients extra savings.
First find out what it is that they are looking ot achieve in this refinance. Most likely it will be savings or something of that nature. Current events if brought up in innocent conversation could spark some kind of response that you can work with as a sales tool to better your chances to close that loan.
My example above about the gas prices has been and will continue to be a big attention grabber for a long time. Well if I can show them how to save an extra $150.00 each month or more that is just one more angle I can work to show its worth to them.
Remember it’s you and them and most times it’s over the phone you have to find a way to be professional but create a connection between the two of you that will allow you to stick out in their head especially if they are shopping.
Who would you go with someone that is connecting with you on your needs and helping you solve problems that involve their bottom line or some rate quote from a huge company that is trying to meet their quota and has no time to build that all important word “rapport”.
Do not let your borrowers do these 6 things while you are trying to help them get into their new loan!
Wednesday, May 21st, 2008When buying a home, there are two stages in the home loan approval process.
Stage 1 starts when a home buyer submits a mortgage application to his loan officer for a pre-approval.
A pre-approval is a “walk-through” mortgage approval that says — at a given purchase price and down payment amount — the home loan application will very likely be approved.
Stage 1 ends when the buyer signs a purchase contract on a home. At this point, the “walk-through” approval is useless because the buyer now needs a real home loan approval from an underwriter and not a loan officer.
Thus begins Stage 2. During the second phase of the approval process, a mortgage underwriter is reviewing income, assets, credit, job history, and other items, too; the underwriters job is to make sure that the buyer meets the bank’s criteria for lending.
If the loan officer did his job in Stage 1, Stage 2 is just a formality. And most times, it all goes according to plan.
Occasionally, though, a home buyer sabotages his own mortgage approval by inadvertently changing his “risk profile”. It doesn’t happen on purpose, of course — it just happens.
So, consider this a quick primer of what not to do while you’re between Stage 1 and the completion of Stage 2 of the home loan approval process. Following these pointers will help keep the risk profile consistent.
1. Don’t buy a new car (or take on a larger lease payment)
2. Don’t quit your job or change industries (and certainly don’t switch to a heavily commissioned role)
3. Don’t transfer large sums of money into or out from your bank accounts (and remember that “large” is relative)
4. Don’t miss a payment to a creditor (even if you don’t think you owe it)
5. Don’t open a new credit card (even if you’re getting 10% off your new bedding)
6. Don’t accept a cash gift without talking to your loan officer first (because there’s rules on how to accept them)
There’s other items, too, but this a good start.
We need to educate our borrowers on this stuff and I don’t care if it is a purchase or refinance loan. If we are educating our clients of the above items we are letting them know how to better there experience and make the process easier on them too.
With the Housing Index this low what choice do you have?
Wednesday, April 9th, 2008Did you know that with a FHA loan you can lend up to 95% of the houses value if you need to go cash out and up to 97.75% rate and term. WOW!!! So here is an example for you to think about. If you have a client 15 months ago with a 580 credit score and no late payments on their mortgage you had a few options to go 95% loan to value cash out. RIGHT? Well, it’s the first part of April 08’ that does not exist anymore and even if there is a few out there what kind of rate are they going to charge? Ouch!! My guess is the rate is going to be ugly and the fees may be worse.
What if you could give your client a 6% and still make some money for yourself and get 5 referrals instead of charging them 8.50% or worse. Last week I had a reader send me an email and ask me if I felt guilty putting someone in a loan that had mortgage insurance and 1.5% up front MI funded in the loan. I laughed for a second and said let me guess you are one of those guys that sells the benefits of a higher rate vs. MI right. The guy said you bet. I said what is the savings to your client with the 8.50% vs. my 6% on a $150,000.00 dollar loan in 12 months, 24, 36, 48 and at 60 months?
Here is the answer because he couldn’t give it to me. The up front MI is $2,250.00 and the monthly MI is about $63.44 per month so let’s break this down. The monthly payment for principle and interest and MI is $976.26 vs. the higher rate of $1153.37 which is a difference of $177.11 which would take you about 12 months to make it up and then to be better off with the FHA loan. Then you are showing a savings of about $2135.32 per year and that is if you don’t invest the difference or reapply it back toward the principle. Then the savings really start to grow!! Now keep this in mind if you were selling in a price sensitive market like we are right now would you rather sell a 8.50% or 6%? Which do you think your client is going to feel more comfortable with? Not to mention it is a 30 year fixed.
The Inception of the Federal Housing Administration Part 2
Tuesday, March 25th, 2008I wanted to finish up with a little history on the Federal Housing Administration. Last week I was telling you when FHA started and gave you some insight into how they began and a few of their major achievements. The Federal Housing Administration has closed millions and millions of loans both residential and multi-family and the only thing that has really changed over the past 70 years is the ease of underwriting. There are several different types of FHA programs for us to use to help people with their financing needs. There are programs for borrowers if they are looking to purchase, refinance or even buy a home that needs improvement. There are a lot of myths about FHA loans and how they are hard to work with and get folks approved. I have several case studies where I have personally done the loans and they would blow you away.As many of you may or may not know, FHA was there for the American people when over 2 million construction workers lost their jobs in the 1930’s and 1940’s. Now, FHA is doing the same thing, helping the struggling house market. Weird if you think about it several years later we, the American people, need a shot to the arm and a little break to get us by for now.
I have several different topics I want to go over and explore. Some of the upcoming posts will include case studies of my FHA deals, current myths of working FHA loans, and that is just to get us started!! Thanks again for reading and let me know what topics you wish to hear about in the future.
P.S. Make sure you are reading Raymond Denton’s articles too. Reverse mortgages are big and I only see them getting bigger and bigger over the next several years!!
The Inception of the Federal Housing Administration Part 1
Tuesday, March 18th, 2008The Federal Housing Administration was developed back in 1934 and did not become part of the housing of urban development until 1965 and at the time the housing market was flat as could be. Hundreds of thousands of people were without work and having to take jobs for less money which made home ownership seemingly impossible before FHA that is. For you folks that feel like it is hard to get approved for a loan today check this out. Most of these loans were balloon payments after a short 3-5 years and max of about 50% loan to value. Before this folks were mainly renters as a matter of fact only 4 out of every 10 households owned their homes.In the year of 1940 FHA had a main focus and that was to help returning veterans coming home from the war get into homes. In the 1950s, 1960s and 1970s, the FHA helped to spark the production of millions of units of privately-owned apartments for elderly, handicapped and lower income Americans. When soaring inflation and energy costs threatened the survival of thousands of private apartment buildings in the 1970s, FHA’s emergency financing kept cash-strapped properties afloat. The main reason I want to start with this was to give all you folks an idea that FHA is here now just as it was 75 years ago!! The main reason why I wanted take a few minutes and give you some history to FHA is for your to truly appreciate what I do for people you should understand that this loan has weathered many housing market storms over the past 75 years and it will continue to do so but at times underwriting guidelines get strict and sometimes loosen up like right now. So for you folks that feel like you can’t be helped you may want to call or email me instead of taking upon yourself and guessing.