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A passion versus a vocation
A brief word
on myself as a person who will address business and ethics. My name
is Jim Moore. I will tell you that I was raised in
a household which was credit challenged and I as a young man supported
myself by delivering newspapers. I have a keen understanding surrounding
the value of a dollar. My personal opinion is that
the general public wants a good product for a fair price.
It will be my earnest attempt to provide accurate information that
is suited to normal circumstances which will provide the majority
of persons the best choices in todays complex market place.
Quality is usually a bargain..
Ok let's get real, I'd really like to teach you Texas Hold-em, but
if it's a mortgage we need to talk about let's look at how the Banks/Brokers
determine if a loan is approvable. The formula is simple...it's just
this:
Three C's Equal Rate & LTV (Loan to value)
Collateral - Assets pledged by a borrower to secure
a loan or other credit, and subject to seizure in the event of default.
Capacity (Employment) - A borrower's ability to repay
a debt
Credit - The borrowing capacity of an individual
or company.
Simply put, If the property or collateral is worth the price...and
you haven't more than 2 or 3 skeletons in the closet..you should be
approved for an excellent mortgage product. If one of the "C's"
is questionable you are approvable but there may be conditions and
or adjustments (such as little interest rate bumps). If two "C's"
are in question, you might get a mortgage but there will be a price
to pay..(It will be up to you to determine if the "price"
is worth the time and effort).
Later we will discuss common questions and how to elicit integrity
(or lack there of) but for now lets focus on what our hometown boys
do to set up your mortgage.
Simple ...they either load the front of the wagon or the back of the
wagon. How's that again?? Yes the "load" is either in the
front in fee's or the back in rate.
You normally will see a front loaded loan. There will be normal charges
such as a couple hundred for Underwriting, possibly a few hundred
"Broker Fee" some Insurance & Title fee's...a couple
hundred for a closing (at a title company) and a few nickle dime fee's
for Overnights.
The fee's that you want to watch closely are: ORIGINATION,
DISCOUNT, AND OR BROKER FEE'S..those are pure profit (not that they
should be at zero, but anything over about 1% of the loan amount would
begin to get my attention and should be addressed).
Back end fee's are a little trickier...brokers are
required to disclose them (as YSP and the disclosed amount is not
added to the fee's so it's almost as if it's not there).
Banks do not have to disclose YSP (Yield Spread Premium) so it's earned
by them but you won't see that WINDSHIELD COMING and you definately
don't want to be the perverbial bug smashed by it. How you avoid that
is by checking rates on the day you lock your loan...If the rate lock
agreement shows that the lender's YSP is 102.750 then that indicates
he's earning a commission of $2750 on every 100,000 borrowed. That's
serious...a one million dollar loan that earns a bank or broker $27,500
commission is to healthy a price to pay. Again know your rates and
make certain you have a clear understanding before proceeding to lock
or proceed. (THIS IS A CRITICAL POINT IN A MORTGAGE TRANSACTION).
Next > Common Questions & Finding a Mortgage
Broker
If you are looking for advice in how to finance your business or trying
to find out information about the ways that rental property or owner
occupied real estate can be financed, feel free to contact
me. You should get an answer fairly quick.
More info
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