Realtors:  Educate your buyers so that you are less likely to lose them...
I just got off the phone with a friend of mine who was a Realtor but got out of the business.  He had one last deal he was working on and just found out that his client found a home online - Realtor.com.  The client called the listing agent on the property and made an offer and completely cut my friend out of the loop.
While we were discussing this we were wondering if he thought he was going to save some money since only one agent would be involved.  Of course, both my friend and I knew that the truth of the matter would be that he would not get proper representation going straight to the listing agent since she really represents the seller AND he would also not save any money since the listing agent would make the entire 6% commission that is paid by the SELLER - not the buyer.  
My friend didn't say whether he had eductated the buyer about these things and I didn't want to ask in case he hadn't, but I did want to post this story so that any Realtor who reads this will see how important it is to educate your buyers.  When I meet with clients, I always educate them about what loans they would qualify for and what their options are and which loan is the best loan for them relative the their stated goals - usually the lowest monthly payment.  I also talk to them about other lenders from a perspective of where I have worked (big bank, broker, and mortgage bank) and the typical strategies of many loan officers to try to get business.  I still lose a deal every now and then but of the few that I've lost, I've had a few come back to me after the fact and tell me they wish they had stayed with me because what I told them would happen ended up happening.  Hopefully your clients will stay with you and get the benefit of your expertise and services and they are more likely to stick with you until the end if you educate them properly.  

Have a great weekend.  I'm available at 702-812-1214 if you have any lending questions or need a pre-approval for a client.
 

Quick Reference Guide for Conventional Loans

This is the third in a series of posts meant to provide you with a some quick and easy guidelines for the most common and popular loans - as well as a few niches - in addition to defining some benefits of the various loan programs for the right customers.  On Monday I provided a quick reference guide for FHA loans and on Tuesday, the quick reference guide was for VA loans.  Today, as promised, conventional loans is the quick reference flavor of the day.  Feel free to call or email if you have any questions or you can leave comments down below and I will address those as well.  Here you go:

Conventional loans offer several alternatives to fill the gaps:

Program guidelines:

            Loan-to-Value:  up to 97%

            Debt-to-Income Ratio:  as high as 45%

            Minimum Credit Score:  620+ (best with 680+)

            Mortgage Insurance: 

            1)    required on loans over 80% LTV

            2)    no up-front MI, only monthly (97% is better than FHA with the same monthly factor and no up-front insurance)

Reserves:  typically 2 months PITI but depends on the program

            Bankruptcy:  Need re-established credit

            1)    Chapter 7 – eligible 4 years from the discharge date

            2)    Chapter 13 – eligible 2 year from the filing with Trustee’s approval

Foreclosure / short sale:  eligible 7 years from the foreclosure date or sale date.

Benefits to the buyer:

            1)    Lots of down-payment / loan program options

            2)    Non-owner occupied and 2^nd home financing allowed

            3)    Debt ratios up to 45%

            4)   Reserve requirements dependent upon program

            5)   Lowest payment option available with 20% down and no mortgage insurance.

D. Jed Wunderli
Certified Mortgage Planner
Alterra Home Loans
702-812-1214