Luminate Michigan

Fed Drops Rates… Time to Refinance or Buy???

Thu, 19 Sep 2024 19:39:00 GMT

After 30 months and 11 straight increases in the Federal Funds Rate without a drop, the Fed FINALLY shifted gears and dropped their rate. What the media will lead you to believe is that all rates are automatically dropping by 0.50% including mortgage rates… which is NOT the case. Let’s explain…

The Federal Funds Rate is the overnight borrowing rate that banks and institutions pay to borrow money from the Federal government. The money is what the banks loan out on HELOCs (home equity line of credit), auto loans, credit cards, and other short-term loans. So, yes, your credit card or HELOC rate will see the effect of this drop within the next 30-60 days, but this doesn’t directly affect mortgage rates.

On the other hand, mortgage rates are based on the bond market which is affected by inflation which is affected by the Fed rate (borrowing costs). The market had expected this rate drop since the last Fed meeting in July 2024 but they were only expecting 25 bps. The surprise 50 bps drop actually shocked and sort of worried the market because a larger than expected drop by the Fed is typically warranted by a weaker than expected economy.

That’s not to say that mortgage rate aren’t going to drop, because we definitely believe this is the early stage of lower rates, but it’s not instant satisfaction.

If you have any questions or there’s anything we can help with, please give us a call at (248) 633-8555.

Also if you or anyone you know needs a purchase or refinance mortgage anywhere in the country, feel free to reach out. We are true mortgage advisors that will always look out for your best interest. We would love to help!

-Alex Kandah – National Mortgage Advisors

The post Fed Drops Rates… Time to Refinance or Buy??? appeared first on Luminate Michigan .

Battling Annoying Spam Calls from Trigger Leads!

Fri, 07 Jun 2024 14:33:00 GMT

The hot topic in the mortgage market over the past couple years has clearly been the drastic increase in rates. This dramatically slowed down business on purchases and refinances which lead to another pressing issue… trigger leads!

When a lender pulls somebody’s credit for a mortgage, the credit bureaus sell these trigger leads to dozens of lenders that are willing to pay for them. They are essentially telling those paying lenders that John and Jane Doe just applied for a mortgage so here’s their contact info that we have on record. The client then gets bombarded with calls, texts, and emails for the next several days. We’ve had clients receive 50-60 calls in a day from other lenders trying to steal their business.

This practice not only invades privacy but also bombards clients with an overwhelming number of calls from lead-based lenders. Typically those are lenders that have inexperienced “loan officers” or sales reps sitting in cubicles making hundreds of calls each day.

This relentless pursuit by lenders has increased quite a bit as the amount of available deals has decreased tremendously since early 2022. The market has turned into a free-for-all where rules and ethics seem to have flown out the window for many. Some of these lead offices even try to pretend they’re calling from the lender that the client is working with to get more info from them. It’s a very bad practice and bad look for the entire industry in addition to being a complete inconvenience for clients!

The Industry is Fighting Back!

Many ethical lenders have been working with the government to rid the industry of this terrible practice. We have proposed bills in both the House and Senate aiming to regulate the use of trigger leads more strictly. We are optimistic something will come together to help prevent these vultures from harassing clients! Please reach out to your local congress-man/woman to push them to get some restrictions passed ASAP!

Tips to Get Ahead of Trigger Leads

If you are currently or plan to apply for a mortgage, here are a couple easy things you can do to help yourself from getting harassed by these ‘call-center’ lenders:

Sometimes these things don’t stop them all from calling but it will definitely help with the majority. As always, you can reach out to us if you need any help or have questions.

Also if you or anyone you know needs a purchase or refinance mortgage anywhere in the country, feel free to reach out. We are not call-center sales people harassing clients all day. We are true mortgage advisors that will always look out for your best interest. We would love to help!

-Alex Kandah – Bank of England Mortgage Troy (248) 633-8555

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“I know a guy, who knows a guy… blah blah blah… mortgage rates!”

Wed, 12 Jun 2019 17:14:00 GMT

I laugh and cry when a conversation starts off with these words from a client, friend or anyone discussing mortgage rates. I laugh because I know where the conversation is heading and know the truth that I’m going to have to unravel for them… and I cry because I know where the conversation is heading and know the truth that I’m going to have to unravel for them!

I can’t keep track of how many times I’ve gone through this conversation with a client or just anyone when the subject comes up… today’s mortgage rates! I could (and probably will when I retire and have time) write a book about this and what I’ve learned in my mortgage career since 2003. You would think that not much really surprises me because I’ve seen A LOT of things in this industry, but it still amazes me when I see how misleading many lenders, brokers, and banks are with their advertising of mortgage rates.

I seem to always get randomly asked the question, “what are mortgage rates right now?”. Well the answer to that is as simple as asking, how much is a payment on a car! There are SO MANY factors that can determine mortgage rates for someone’s scenario. Everything from the obvious like credit score, type of mortgage, loan term to things that not many people realize play a role such as the type of home (single-family vs. condo, etc.), the amount of equity in the home, the state it’s located, and the seldom disclosed… POINTS !

I want to compare this to asking how much a car payment is. Here are just a few factors that could affect a car payment:

You can see where I’m going with this and it’s simply for a car… not a home – only the biggest purchase most people make in their lifetime! You can imagine how much plays part in figuring out mortgage rates, better yet the best rate, for a client. Having someone who will take the time to educate you on the different options and be transparent while providing probably the best service you can receive is crucial!

Please get everything documented if someone claims they can give you mortgage rates lower than what is typical in the current market. In most cases, they will tack on discount points which is essentially you buying down the rate. That could be a good or bad thing, depending on your scenario, but anyone can offer you a rate buy-down. I always give those options to my clients with an analysis to help them determine if it makes sense for them or not, never push it on them.

If you or anyone you know needs a purchase or refinance mortgage anywhere in the country, feel free to reach out. We would love to help!

-Alex Kandah – Bank of England Mortgage Troy (248) 633-8555

The post “I know a guy, who knows a guy… blah blah blah… mortgage rates!” appeared first on Luminate Michigan .

What Happens During Mortgage Underwriting?

webadmin@goluminate.com (Luminate Marketing Team) — Tue, 12 Mar 2019 16:48:38 GMT

What is underwriting?

Your mortgage lender uses underwriting to take steps to verify your income, assets, debt, and property details along the path to approving your home loan. It's a way to reduce the mortgage lender's risk in providing you with the funds while ensuring you can actually afford the home you would like to buy.

What do you need for underwriting?

Your mortgage officer or lender will ask for a range of documents that answer questions concerning your income and ability to afford the home. These documents likely will include your tax returns, pay stubs, W-2s, W-9s, gift letters, and bank statements.

The lender will assess any debt you have, such as monies owed on vehicles, student loans, credit cards, or furniture. The lender looks at any retirement savings and investments. Taken together, these paint a picture of your financial health.

What will happen during underwriting?

An underwriter is a financial expert specifically trained to do this kind of risk assessment work. The individual looks at your finances to determine how much risk the lender can take if they decide you qualify for a loan.

Essentially, this underwriter decides if your loan will be approved or not. They want to ensure you don't receive a mortgage that you cannot afford and risks the lender initiating foreclosure proceedings.

During the underwriting process, the underwriter will:

#1-Review your credit report

The credit report shows your credit score and how you used your credit in the past. They search for red flags like bankruptcies, late payments, and overuse of credit. A clear record with a good credit score shows that you are responsible about repaying debts. This improves your chances of loan approval plus better loan terms and interest rates.

#2- Review your home appraisal

The underwriter reviews the appraisal on the intended home. The appraisal is to verify that the amount you are asking for in funding aligns with the home's actual value. The appraiser pulls comparable sales from the neighborhood and inspects the home to make sure the purchase price is reasonable.

#3- Verify your income

The underwriter needs to prove your employment situation and actual income. You typically need three types of documents to verify your income, including:

W-2s from the last two years
Recent bank statements
Your most recent pay stubs.

If you are self-employed or own a large share of a business, your underwriter will look for different documents like your profit and loss sheets, balance sheets, and personal and business tax returns.

The underwriter may ask questions about where certain deposits came from or for you to provide additional proof of assets.

#4-Assess your debt-to-income ratio

The debt-to-income ratio is a figure that shows how much money you spend versus how much money you earn. DTI is calculated by adding up your monthly minimum debt payments and dividing it by your monthly pretax income. The underwriter compares your debts to your income to verify you have enough income to afford your monthly mortgage payments, taxes, insurance.

In addition to monthly income verification, the lenders want to see your assets because these can be sold for cash if you default on your mortgage payments.

#5- Verify down payment

Lenders want to make sure you have enough funds to cover the down payment and closing costs on the home purchase. Underwriters also look at your bank statements and savings accounts to ensure that you have the funds your sale and purchase agreement outlines you would make at closing.

How long does loan underwriting take?

Depending on how busy the underwriter is, the approval process can take 2 to 3 business days to work through the different steps. Other parties can hold up the approval process, such as the appraiser, title insurance, and any other external items in the process.

Help speed along the underwriting process by actively responding to any requests from the team. Respond to any questions quickly and honestly. Avoid opening new credit lines during the process, as that will complicate your approval.

After underwriting is finished

Once the underwriter is complete, they will approve, approve with conditions, suspend, or deny the loan application. The approval will give you the all-clear to close on the home purchase. For any other determination, review the reason and see if you can take steps to improve your chances of a future approval.

Rent vs. Buying

webadmin@goluminate.com (Luminate Marketing Team) — Tue, 12 Mar 2019 16:47:17 GMT

The lease to your apartment is coming to an end and you find yourself faced with the choice of signing another year long lease, or apartment hunting again. But have you thought about starting your journey to owning your dream home? Owning a home can be a big decision to make, but it can also be a worthwhile one.

Big decisions should be made on an informed basis and, of course, Luminate is here to help!

Before we jump straight into the benefits to owning a home, let’s take a look at why some choose to rent.

1. Flexibility. Signing a lease for a year requires minimal commitment and allows for more room to relocate if needed.

2. Maintenance. This is one of the biggest draws to renting. If something breaks or goes wrong in your apartment, the landlord pays to fix it, not you!

3. City living. Home ownership and city living don’t tend to work together well unless you are buying a condo (which can be pretty pricey). So, many people who want to live in the city tend to rent instead of buy!

4. Amenities. Many apartment complexes offer amenities like shared spaces, pools, gyms, etc.

5. Lower utility costs. Most apartment complexes only require you to pay for your gas, electric, and internet; whereas owning a home comes with many more utility expenses.

Now let’s take a look at the many benefits that come along with buying a home versus renting.

Here are just a few:

1. It’s an investment.

2. You get to make it your own. Many landlords don’t allow major (and sometimes even minor) changes to the interior of your home. That includes paint colors, hanging larger fixtures, or changing other design aspects. Buying your own home ensures that you get to make it completely your own!

3. You don’t have to pay pet rent. Most apartments require you to pay a deposit, cleaning fee, and a monthly ren payment if you want to bring a furry friend into your home. Those costs can add up fast.

4. Mortgage costs stay the same while rent payments rise.

5. There are many tax benefits you can receive if you own a home.

The decision between renting or buying can be a hard one to make. But our team at Luminate is here to support you on your journey to owning your dream home. So whenever you’re ready to buy, we are ready to help!

Get in touch with us!

What to Consider when Buying a Bigger Home

webadmin@goluminate.com (Luminate Marketing Team) — Tue, 12 Mar 2019 16:42:45 GMT

Deciding to upsize your home is a significant step. Moving from your first home to your next can be both exciting and stressful. Before deciding if up-sizing to the next home is right for you, take some time to address the following questions.

Why do you want to upgrade your home?

Sometimes the answer is clear. Many people decide to buy bigger because their family is growing and they have simply run out of space. Whether it's a new baby or aging parents moving in, having extra space to accommodate more people makes sense.

Other homeowners want to upgrade for different reasons. Some decide to rent a room or outbuilding to generate some extra income. Sometimes, it's about how the home is working for the lifestyle. Perhaps your home would be more functional if you had more storage space, or maybe you're running a business from your home.

Explore all the reasons you want to upgrade your home so that you and any other decision-makers are absolutely clear about why you want to upgrade.

Is bigger truly better?

Given the current housing demands, consider this answer carefully. The high demand for housing is pushing median housing prices higher and resulting in an ultra-competitive market. While you may get more from your home sale, you're going to pay out that money when you purchase a new home.

Before you decide moving is the solution, are there steps you can do to make your current property work better? Sometimes the answer isn't moving but making some layout changes or decluttering the property. You could use a home equity line of credit (HELOC) to upgrade the space, do some renovations, or add an addition that would solve your space needs.

How long will you be in your next home?

Like your current home, the longer you stay in it, the better it is to build equity. Purchasing a new home will have additional costs for closing and moving. Avoiding these costs will help you save money in the long run. If you do need to move, make sure you plan to stay in the new home for an extended time to make the closing costs worth the expense.

Where will you have to move to find something bigger?

When we buy a home, we buy not just the structure but the community around it. Do you really like the neighborhood you are in? Perhaps you initially picked the area because it was close to the amenities you like, or it was in the right school district for your children. Maybe you like the people and the community amenities. The thing is, to find a bigger home, you might need to leave that neighborhood.

Can you afford a bigger home?

If you are serious about upsizing your home, do the math to make sure it is a wise financial decision.

First, estimate how much you might clear on the sale of your current home. It can be helpful to talk to real estate agents to get an estimated list price. Compare this to how much you owe on the house, plus closing costs and the commission you'll pay an agent.

Talk to Luminate Home Loans about your current financial situation. Get an estimate on how much home you can afford right now. Look to see if that figure aligns with what buying a bigger home means in your local real estate market.

Remember, a bigger home means more expenses. Create a new estimated budget for your housing expenses. Include utilities, property taxes, insurance, and home maintenance for the larger home.

Estimate any other expenses associated with buying your next home. These include the closing costs, the storage of your personal items, and potentially temporary housing if you need to wait to move into your new home.

What are your home purchase goals?

Before you start looking on the market, set your criteria for the home purchase. Do you know why you are buying bigger? If it's to add bedrooms or for home office space, that should be one of your goals. Look for the features you want and stick to your budget.

Stepping up in your home

Moving into a larger home can be an exciting step in your life. Just make sure it's a decision made carefully and with due consideration for the big picture. It's easy to overextend what you need if you are not careful in your purchasing decision.

Talk to your real estate professionals and Luminate Home Loans about what a larger home could mean for you.

Buy More Home with a Low Down Payment!

Mon, 31 Dec 2018 17:20:00 GMT

It’s official! All major agencies have announced loan limit increases in most counties for 2019. What does that mean for you?

Basically you are able to purchase or refinance a more expensive home with a higher loan amount using a traditional loan program; conventional, FHA or VA mortgage. In most counties in 2018, you were limited to a purchase price about $305,000 on FHA, $453,100 on VA, and $476,000 on conventional mortgages with the minimum down payment. Now you can buy even more home with the minimum down payment per program requirements (if you qualify).

Below are the updated 2019 limits for one-unit homes in most counties:

For FHA mortgages- $314,827 (up to $726,525 in high-cost areas)

For Conventional mortgages- $484,350 (up to $726,585 in high-cost areas)

For VA mortgages- $484,350 (up to $726,525 in high-cost areas)

Limits for 2-4 unit homes have also increased. This is good news considering the recent increases in home prices and values.

As always, in 2019 and the future… make SURE you have a knowledgeable, trusted mortgage lender and broker on your side. It could mean the difference of thousands of dollars if they are not looking out for your best interest first or simply aren’t knowledgeable on what options are available to you! Feel free to reach out to Bank of England Mortgage Troy with any questions or additional guidance at (248) 633-8555 or email alexk@boemortgage.com. We wish you all a blessed and successful 2019!

Happy New Year and Best of luck!

The post Buy More Home with a Low Down Payment! appeared first on Luminate Michigan .

Best Days of the Year to Buy a Home

Wed, 21 Nov 2018 15:50:00 GMT

Interesting article I thought I would share before the holiday madness begins. It mentions the best days to buy a home. I wish you and your loved ones a happy holiday season and blessed new year!

“Homebuyers thinking of spending big on Black Friday and Cyber Monday may want to hold back for a larger purchase next month.

An analysis by ATTOM Data Solutions shows that seven of the top ten days to buy a home are in December and that’s because there are discounts to be found.

The study discovered that only ten days in the year bring discounts below the estimated market value based on 18 million single family home and condo sales over the past five years is evidence of the hot sellers’ market of the past five years.

“People closing on a home purchase December 26 were submitting offers around Thanksgiving and starting their home search around Halloween — likely not a common path to home purchase for most buyers and exactly why it’s the best time to buy,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “Buyers and investors willing to start their home search right about when stores are setting up Christmas decorations will face less competition and likely be dealing with more motivated sellers, giving them the upper hand in price negotiations.”

States, metros with the biggest discounts
The states realizing the biggest discounts below full market value were Ohio (-8.8% in January); Michigan (-7.9% in February); Nebraska (-7.3% in December); Tennessee (-6.8% in December); and Delaware (-6.5% in December).

The metro areas realizing the biggest discounts below full market value were Dayton (-13.1% in January); Detroit (-12.8% in February); Cleveland (-12.0% in January); Honolulu (-10.3% in June); and Milwaukee (-9.3% in December).” (information courtesy of MPA)

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Improve Your Odds of Getting a Home with a Mortgage Pre-Approval

Wed, 12 Sep 2018 04:30:00 GMT

Buying a home is one of the biggest financial transactions people experience in their lives, so it’s no wonder financing is one of the biggest challenges buyers face when shopping for a new home. Even though the finance part of home buying can be stressful, the good news is there are steps you can take to ensure a smoother process and improve your odds of getting approved for your home loan. The first and most important thing is to have a reputable Loan Officer on your side, guiding you through the process. Then…

1. Get Pre-Approved Early

If you want to be ready to make an offer on a home as soon as it hits the market, get pre-approved early in your home search. Having this pre-approval will help you move fast when you find the perfect home. It’s also typically the first thing a real estate agent will ask you for before helping you with your house-hunting journey. So getting it done before talking to an agent will show that you’re serious about buying and ready to start touring homes immediately.

At Bank of England Mortgage Troy, Alex Kandah will take the appropriate steps to check important factors that can make or break the mortgage prior to issuing a pre-approval letter. That way you can have peace of m

2. Get an Underwritten Pre-Approval

If you want to take an extra step and do some work upfront to get your offer to stand out, consider asking your lender for a fully underwritten mortgage pre-approval . This will not only help speed up the mortgage process even more, but it will also show that you are a serious buyer who has been vetted.

During this process, a lender will verify the information in your mortgage application, your income, assets and debts, and send your loan through the underwriting process so that you can quickly get final approval for a loan once you’ve found that perfect home and have an accepted offer. As long as your financial condition and creditworthiness hasn’t changed since you were pre-approved and the home meets other conditions, you’ll be approved for the loan pretty easily.

Doing this work up front will allow you to close quickly once the offer is accepted, opposed to the sometimes-lengthy time frame of these steps. Processing times for a loan are dependent on the time of year but can range from 2 weeks to an average 30+ days. Some lenders can take as long as 60+ days to process your loan but Bank of England Mortgage Troy is well-equipped to close most types of mortgage loans within 30 days with your diligent cooperation in gathering the necessary docs.

Even though getting fully underwritten sounds like more work initially, you’ll have to go through this process in the later stages of the process anyways, so get it out of the way early to save time and help you stand out. This is highly recommended if there are any possible ‘snags’ that could prevent you from qualifying. Talk to your Loan Officer about this if there any concerns.

3. Get Your Credit in Check

One of the most crucial component of getting approved for a home loan is your credit score. Not only does it have a huge financial impact by helping determine your interest rate, but lenders will also use this number to determine if you will be approved for a loan. Getting a firm grasp on how your credit is early in your home search could give you the time you need to improve it, if necessary.

Even if you think your score is good enough, it’s a good idea to get a copy of your credit report and take time to review it for any errors. Sometimes boosting your credit score can be as simple as disputing errors or paying down debt. If you catch issues late, you may not have enough time to correct them before locking in your interest rate and closing. It’s also important not open any additional debts such as credit cards, loans, leases, lines of credit, etc. before or during the mortgage process because that could prevent you from qualifying for the loan.

4. Demonstrate Financial Stability

When lenders assess whether you qualify for a loan, they’re looking to make sure you’ll be able to repay the loan and not default. You can improve your chances of qualifying by demonstrating that you’re financially stable.

Limiting your spending is one of the easier ways to make sure your lender doesn’t find any red flags when reviewing your financial history. Lenders generally don’t like to see any recent big purchases or that you’ve recently missed payments, so make sure your payments are on time.

To help ensure that you aren’t likely to miss mortgage payments, lenders like to see work consistency. Unless relocating or transitioning to a new company in the same field, try not to change jobs during this process as the lender needs to document your income and typically needs a history of receiving that income. Reach out to Alex Kandah if you think a potential career change could affect your qualification.

5. Move Quickly Once Your Offer Is Accepted

Unfortunately, there are a number of ways mortgages can fall through once your offer is accepted. But if you’re able to speed up the loan, inspection and appraisal periods, you might find yourself coming out ahead.

In some markets, the appraisal can take a particularly long time. So, to speed this process up your lender may order the appraisal right after your offer on the home is accepted and you receive the initial loan disclosures. Getting it done quickly may give you time to address any issues without delaying the closing.

Another step you can take to ensure a smooth, speedy process is to schedule your home inspection as soon as your offer is accepted. That way if the inspector finds something wrong, you’ll have time to bring in a specialist to take a look. Your realtor can guide you through this but feel free to reach out to Bank of England Mortgage Troy with any questions or additional guidance.

Best of luck!

The post Improve Your Odds of Getting a Home with a Mortgage Pre-Approval appeared first on Luminate Michigan .

Online Mortgage vs. Human Experience in a Digital World

Tue, 07 Aug 2018 19:17:00 GMT

The post Online Mortgage vs. Human Experience in a Digital World appeared first on Luminate Michigan .

Concerned About Another Market Crash?

Thu, 10 May 2018 15:40:00 GMT

(This one is a little long, but I need to address this.) I speak to clients, friends, family, and other current or potential homeowners and people that work in the real estate or mortgage industry on a daily basis. It’s inevitable that the thoughts of the 2008 recession and market crash are in the back of almost everyone’s mind. How can it not be?! considering the detrimental effects it had on the majority of families in our country and other parts of the world! It was a very dark time for many… I can say from personal experience.

I can’t help but sort of laugh now when people say “there’s another crash coming soon” or “we’re heading towards another recession”. I completely understand that people will be skeptical and nervous, especially when they aren’t involved in or understand the back end of the financing process. Let me tell you that it’s HIGHLY unlikely that can happen due to the real estate/financing market for many reasons which I’ll explain. The primary reasons the market crashed in 2008 were the following…(and these may not be all of the facts but I am telling you what I know from my 15+ years in the mortgage industry)

The finance industry in the early-to-mid 2000’s was the “Wild West” so-to-speak. Anyone with a pulse, and in some cases without, could get a mortgage during that time. There wasn’t much regulation which caused many unethical people in the industry to take advantage for their own benefit. The combination of a few different parts of the industry caused a very messy situation that was bound to implode. If you give people too much power and freedom, some will eventually cause trouble!

I remember buying my first condo in 2005 with a ‘Neg-Am’ loan (negative amortization) and my third home for over $600,000 with 100% financing by 26 years old! Sounds crazy right? For those that haven’t heard of Neg-Am loans, they were mortgage loans which would give you an extremely low monthly payment because you would essentially only pay a portion of what the payment should be. The difference, or negative amortization, would be rolled into your home’s equity or ‘future expected’ equity based on market inflation. For example if your fully amortized payment was $1000/month, you would only have to pay say $600 and the other $400 would be added to your loan amount on a monthly basis. Since the market was appreciating at a fast pace, everyone thought this was a great way to buy something that was out of your budget at an affordable payment. It’s sort of like a hybrid-reverse mortgage. Sounds interesting right? That’s what I thought before too! Part of the problem here was that if inflation wasn’t surpassing the negative equity being added to your mortgage, you would be upside down and stuck in that mortgage… as many were once the market crashed. It allowed home-buyers to overstretch their affordability.

The other scenario of 100% financing is somewhat the same. You don’t have any equity going into the property and no skin in the game, so you are once again gambling on market inflation to gain equity. Doesn’t seem like whoever came up with these loans really thought them through! Getting 100% financing on any type of mortgage today, better yet a Jumbo loan, is a long-lost fantasy. Needless to say, thankfully these types of mortgage loans DO NOT exist anymore which helps prevent some of the real estate issues we faced in those times.

To add to that from the standpoint of property market value being over-inflated; Appraisers were not under the microscope as they are now. They were sort of left to do whatever they felt fit in many cases, which sometimes would depend on what side of the bed they woke up on! I recall contacting appraisers directly to place orders (which doesn’t happen now) and the appraisers would ask me “What value do you need?”. Back then, I didn’t think anything of it because I was fairly new to the industry and that seemed to be the norm. Thinking back now and considering all of the crooked people that were involved in the industry, that was INSANE! Today lenders and appraisers do not have any direct contact or communication. AMC’s or Appraisal Management Companies were created to be the liaison between lenders and appraisers. In today’s market, orders are placed by the lender to the AMC then assigned to a certified appraiser on a round-robin system. The appraisal reports are then audited by the AMC before being sent to the lender, which then goes through QC audits with most lenders too. This regulation forces appraisers to be more honest and sometimes very conservative with their market values. That may cause issues if value doesn’t come in where you need or want it to, but it also saves you from overpaying for a home or overstretching your homes equity. It’s a good thing, trust me!

Another issue was that lenders, real estate brokers, title companies, and appraisers could all be owned by the same people and directly affiliated. That can really, well… you can use your imagination about how someone can take advantage of having all the power to control the entire process. There were more factors involved but this sums up a few big points of why I can’t see another market crash anytime soon in my opinion. Yes value has been increasing in many markets, but that’s primarily due to supply and demand as it does with anything else. Once we have more supply (homes for sale) and less demand (buyers), we should see property value settle down a bit. Personally I think that will happen within the next 3-5 years but that’s just my guess. Take it as you will. Best of luck!

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The Mortgage Industry is like many Businesses

Thu, 26 Apr 2018 14:34:00 GMT

In this article I want to clarify and simplify the basics of this mortgage industry for you, our clients. Since we are not a typical ‘brick-and-mortar’ business such as a retail store or restaurant, many people assume our business model is completely different. Well it is in many aspects, but like your neighborhood shop or a Fortune 500 company, we still follow basic business fundamentals… Revenue (customers and product sales) vs. Expenses/ Overhead (cost of doing business- customer acquisition, employees, marketing, etc.). More expenses means more revenue is needed to be profitable. Simple right? I just want you to remember this when you see those expensive TV commercials, numerous internet ads, hear radio ads during prime-time, see billboards/ signs, and receive fancy flyers in your mailbox. That marketing need to be paid by someone and guess who that someone is?! That’s correct… YOU (the client). No you don’t directly write a check for those means of advertising (you can for me if you’d like!), but I promise you will be paying for it with higher fees and/or higher interest rates! Mortgage companies have to make up for it and create more revenue to stay profitable somehow, and if all we offer are loans… well that’s what the costs will be rolled into. How else would these companies continue to stay in business and keep advertising to you?

As interest rates continue to increase, more lenders and brokers are starting to target clients looking to purchase homes as opposed to using refinance leads and cold-calling clients to solicit refinancing. In turn it’s costing those lenders more money whether it’s for advertising, additional sales people, or purchasing leads from several sources. Again those additional costs have to be recouped somehow. Just keep this in mind when you start searching for a lender for your pre-approval and mortgage.

At Bank of England Mortgage, we simply let our service and knowledge do the advertising! My theory is that if we take care of our clients with excellent service, low fees, and great rates… our clients will do the advertising for us (wishful thinking right!). We would rather save you the money on the rates and fees by not spending it on expensive leads or marketing channels. Take this all into consideration when determining which lender will be your best option. Best of luck!

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