Understanding the Mortgage World

I am going to share some of the knowledge I have acquired over the years regarding mortgages, plus interview Lori Martinez a mortgage banker from Peoples Mortgage. Lori Martinez is a great mortgage banker; very honest, compassionate, hardworking and with many years of experience behind her.
In dealing with buyers over the years, one of the questions I have heard most often is: “Why should I use a mortgage banker/broker and not my bank”? So I thought I would share what I have learned regarding mortgage bankers……
A great mortgage banker can cut through the haze of the “loan process experience” for their clients, along with ultimately smoothing the process for a buyer to obtain the home of their dreams. Unlike most banks, most mortgage bankers are available 24/7, you will work with only one person throughout the loan process and because they have access to a wide range of products from a wide range of lenders. This better helps the buyer choose a home loan program that is right for their needs, both now and moving into the future.
I asked Lori Martinez of Peoples Mortgage several questions regarding loans. Here are the questions and answers for you.

Stacie: Hi Lori, I have several questions I would like to ask you regarding home loans.
Lori: Ok Stacie I will be happy to answer them for you.
Stacie: The first question I have is, what information will a buyer have to provide you in order to obtain financing for a home loan?
Lori: I communicate to my clients that I will come to them three times for needed documents. The first time is when I am building their application file. I will need basic documents such as paystubs, IDs, bank statements and tax returns. The second time they will need to provide me with more documentation is when my processor reviews the file with an “underwriter’s eye”. We might need additional information such as letters of explanation on large deposits showing up on the bank statements or gift fund documentation if that is the route the client is taking. The goal is to have everything an underwriter will need to give us a final approval upon first submission. If this happens, great, if not then the underwriter will provide us with needed items to get the final approval and close the loan. If this happens it would be items that at that point should be easy for the client to submit, such as a current bank statement or pay stub.
Stacie: What impact does a buyer’s credit card balances have on a buyer’s borrowing capacity?
Lori: The largest impact on fico scores will be if the report is showing 30, 60, 90 day late’s on open lines of credit. It is extremely important that people pay their bills on time. As far as balances on credit cards, I recommend that they keep the balance of available lines to 20% of the limit. If they know they will be applying for a home purchase in the future, part of their game plan should be in paying down debt before applying.
Stacie: What are the different types of loans and what are the pros and cons for each?
Lori: There are several loan types and programs, but the two basic ones that most consumers apply for are the FHA and conventional loans. The basic pro’s for an FHA are that you only have to put 3.5% down and you can use 100% gift funds. The con is that you will have to pay an upfront mortgage insurance fee of 1.75% of the loan amount and the needed mortgage insurance can be higher than a conventional loan. On a conventional loan the pro’s are that the rates can be at times, much better than an FHA and you do not have to pay the 1.75% fee. With having to put more down, 5%-10% of the loan amount, lenders feel you have more “skin in the game” so mortgage insurance is often lower. The con’s are you cannot use 100% gift funds. All the pros and cons on programs are subject to the applicants’ personal scenario so they must work with someone who will analyze this in detail and be able to give them the information so they can decide which way to go that will be in their best interests.
Stacie:  What should a consumer do before applying for a loan that would put them in the best qualifying position?
Lori: They need to be sure their credit report is accurate and in good shape, have the needed funds in place for their down payment and have a good solid source of income. I recommend that consumers go to www.annualcreditreport.com and pull one of the three reporting agencies reports, pay for the fico score and see what is being reported. That way if there are any errors or debt they need to address, it is completed before I pull a lenders credit report. The report is free, but they will have to pay between $6 and $8 for the fico score.
Stacie: Here is the last question I have for you,  how  long is the typical loan-processing period right now?
Lori: At Peoples Mortgage, depending on the program, we can close a loan within 15-30 days. The longest waiting period we are experiencing is in waiting for the appraisal, which normally takes 5-8 business days.

Stacie: Thank you Lori for the great information!
I  recommend Lori Martinez with Peoples Mortgage; she truly is a Personal Mortgage Consultant!
If you are a first time home buyer, wanting to downsize or need a bigger home, call Lori Martinez today for all of your mortgage needs! Lori’s contact information is below.
Lori Martinez
Personal Mortgage Consultant
Mobile: 602.339.0959
Fax: 623.374.5651
NMLS ID: 216866

Lori Martinez