Friday, September 03, 2004

A little reflection time for Mikol

Here we are… My first blog entry since I started my new job as a ‘Mortgage Specialist’. Unfortunately since this is what I’ve been doing since July 19th it’s what’s on my mind to write about. I’m gaining a hell of a lot of information about the mortgage business. The trick now is putting it all together so that it actually makes sense. I’ll say this much… I used to think that paying someone up to 3% of a mortgage amount as commission to a mortgage broker who just happened to take my application was a scam (and it some cases it is). BUT… If you can get a mortgage broker who actually cares about getting his client the best possible mortgage, then the 3% is extraordinarily well worth it. The common thought (I’ve learned from speaking with many clients who have “read up on mortgages”) is that there are basically 3 types of loans: Conventional, FHA, and VA. They seem to think they know what all is entailed with FHA, and (they assume) they don’t qualify. Or they assume because they have a VA certificate that VA is the best way to go. Let me sum up what the problem is with this logic. In my shop alone we have over 60 wholesale lenders with an average of 7 different programs per lender. I’ll do the math for you. That’s 420 financing programs that we offer out of my shop alone. Not to mention the many “Down-payment Assistance” programs offered by organizations who aren’t even lenders. I’ve seen clients (not just from my team) that have come in with 3 mortgage denials in the past year, who get approved for a mortgage with better terms (rate, payments, re-fi options, etc…) than the loans they were denied for. The flip side of this business is having a good, hard-working family who’s about to lose its home sitting across from us, and we have to tell them that there is nothing that we can do for them because of the over-abundance of medical collections from when their daughter underwent chemo-therapy. This has not happened to me, but I came across a broker who was crying because she had to make that call to a family. The specific program she was trying to go through only counted 3% ($3 for every $100 owed) of TOTAL medical collections toward the client’s debt-to-income ratio. She was working the loan with no commission attached. She wasn’t even going to get paid from the client, but she had the unfortunate responsibility to notify her clients that contacting a bankruptcy lawyer (that they probably couldn’t afford) was probably their only hope to keep their home of the past decade. It’s crazy, but out of all the people we help, that’s the client (who I never met) that I can’t get out of my head.

4 Comments:

Anonymous Anonymous said...

Hey, you have a great blog here! I'm definitely going to bookmark you!

I have a Loan site/blog. It pretty much covers Loans related information. We provide online applications, business, residential, we do all loans.

Come and check it out if you get time :-)

1:31 AM  
Anonymous Anonymous said...

Nice blog. Check out mine if you can. Thanks. finance

7:22 PM  
Anonymous Anonymous said...

Hey, Just came across your va home loan lenders blog. Great work indeed. I also have a va home loan lenders that may interest your readers. Would love you to stop by for feedback

5:39 PM  
Blogger EQ said...

The U.S. Government is the nation's largest provider of financial assistance to women & minority owned small businesses. The U.S. Small Business Administration (SBA) is Congressionally mandated to assist the nation’s small businesses in meeting their financing needs. The SBA has small business loan programs and services to meet most small business needs. More information on U.S. Government Small Business Loans can be found at **www.SBASmallBusinessLoans.com**

How do Government SBA Small Business Loans work?

When a small business owner applies to a lending institution for a business loan, the lender reviews the application and decides if it merits a busiuness loan or if it requires an SBA guaranty. SBA backing on the business loan is then requested by the lender. In guaranteeing the business loan, the SBA assures the lender that, in the event the borrower does not repay the loan, the government will reimburse the lender for its loss. By providing this guaranty, the Small Business Administration helps tens of thousands of small business owners get financing they would not otherwise obtain.

How much money can I borrow?

Here are a few examples of what you can get from SBA small business loans programs:

7(a) Loan Guaranty Program

The 7(a) Loan Guaranty Program is the SBA's primary small business loan program. A maximum loan amount of $2 million has been established for 7(a) business loans.

Low Documentation Loan (SBALowDoc)

SBALowDoc is the SBA’s quick and easy program that provides a guaranty on small business loans of $150,000 or less. Once you have met your lender’s requirements for credit, the lender may request an SBALowDoc guaranty for up to 85 percent of the loan amount. You complete the front of a one-page SBA application, and the lender completes the back. At SBALowDoc centers, the agency processes completed applications within 36 hours.

SBAExpress

This method makes it easier and faster for lenders to provide small business loans of $250,000 or less. The SBA provides a rapid response through its PLP processing center in Sacramento, Calif.— within 36 hours of receiving the complete application package. Lenders use their own procedures to approve and service the loans.

CommunityExpress

The CommunityExpress pilot program is designed to spur economic development and job creation in untapped rural and inner city communities by providing loans and technical assistance. Loan proceeds may be used for most business purposes, including start-up, expansion, equipment purchases, working capital, inventory or real-estate acquisitions.
To be eligible for CommunityExpress, current or prospective small businesses must be located in low- and moderate-income urban and rural areas.

While CommunityExpress is similar to SBAExpress, here are some differences:

• CommunityExpress focuses on predesignated geographic areas that primarily low- and moderate-income urban and rural areas.

• The maximum loan amount under CommunityExpress is $250,000.

• CommunityExpress lenders, together with the National Community Reinvestment Coalition, provide hands-on technical training and support, both before and after loan closings, through community-based, nonprofit NCRC member organizations.

7(m) Microloan Program

The SBA’s Microloan Program provides very small loans up to $35,000 to small businesses and not-for-profit child-care centers through a network of locally based intermediary lenders. In addition to making the loans, the intermediaries provide management and technical assistance to microborrowers and potential microborrowers.

What can I use the loan proceeds for?

You can use an SBA small business loan to:

• expand or renovate facilities;
• purchase machinery, equipment, fixtures and leasehold improvements;
• finance receivables and augment working capital;
• refinance existing debt (with compelling reason);
• finance seasonal lines of credit;
• construct commercial buildings; and/or
• purchase land or buildings.

How do I repay the loan?

The length of time for repayment depends on the use of the loan proceeds and the ability of your small business to repay the loan.The term is usually 5 to 10 years for working capital, and up to 25 years for fixed assets such as the purchase or major renovation of real estate or purchase of equipment. There are no balloon payments, prepayment penalties, application fees or points permitted with these small business loans. Repayment plans may be tailored to each individual small business.

How do I get started?

You submit a business loan application to a lender for initial review. If the lender approves the business loan subject to an SBA guaranty, a copy of the loan application and a credit analysis are forwarded by the lender to the nearest SBA office. After SBA approval, the lending institution closes the business loan and disburses the funds; you make monthly loan payments directly to the lender. As with any loan, you are responsible for repaying the full amount of the loan. Visit **www.SBASmallBusinessLoans.com** for more info.

7:41 AM  

Post a Comment

<< Home