Rates are flat today. We were at the edge of better rates by the end of the day yesterday, but we lost some of those gains early this morning. Today’s comparison mortgage rates with no lender fees are 4.5% on a 30 year, 3.625% on a 15 year and 3% on a 5/1 ARM. (click here for details).
Yesterday we talked about the type of loan that all originators want and need, the type of borrower that I called “the prettiest girl at the dance.”
Today I’m diving into the exact opposite side of the dance floor…the nerd in the corner that nobody is talking too (that was me in high school). When shopping for the best deal you need to be aware if your loan is one of the few types of loans that originator shy away from or price higher due to the workload involved.
Find out what that means in today’s episode:
It looks like Zillow’s IPO release today is doing very well. The stock price is up 120% to $44 a share from its initial price of $20. Not bad for the first day! Hopefully this will give them enough capital to put Rates in Motion on their home page. Lets be clear! These good looks and my never ending knowledge of the mortgage industry are not cheap. Check out the link by by clicking here.
When you are looking for the best deal you need to where your loan falls in these categories. Here are a few types of loans that originator shy away from or price higher due to the workload involved. In no specific order.
1. High LTV refinance loans:
If you are at 95% LTV (Loan to Value Ratio) on the application and your appraisal comes in light, there is a very high chance you will walk on the deal.
2. Self employed borrowers
The simple truth here is that some self employed borrowers tell the originator they make 200K a year, when they actually get the 2 year’s tax returns it shows loss due to all the deductions their accountant made. Lack of income will ensure a denial.
3. If you have a lot of rental properties
These can cause an issue due to rental contract , tax returns and the number of properties each investor will actually allow you to have. Details come out in underwriting in these that can kill the loan. For example – Your renter pays you cash each month and you don’t claim it on your returns. Guess what you cant use it as income either.
4. High debt ratio loans.
The smallest change in DTI can disqualify the loan.
5. Loans on the edge of 80% LTV
If the appraisal comes in light again and the borrower needs PMI – Guess what? Most borrowers walk away.
6. Low loan amounts
A 50k loan has the same issue as the 300k loan. The compensation is a lot different however.
If you are not getting the love you think you deserve at the time of application, it’s probably because you fall into one or more of these categories! A good mortgage loan originator will ask all the right questions up front and prepare you for any hurdles ahead of time if your loan has the potential to be a problem child. FIND A GOOD ORIGINATOR!
Also, if you get a chance, I would love it if you could help me in my dream to bring transparency to mortgage lending by sharing today’s episode on Facebook or Twitter. Let’s change the way people shop for a mortgage…forever!
See you tomorrow!
PS. To ask a question, get advice, or to find out if you’re getting the best deal possible on your loan, just post a comment below. Daily comparison rates, calculators, and other cool features are available in the free Rates in Motion LoanApp by going to your smart phone and clicking on this link, activation code is 9203780002