Interview with Attorney Siegel on “The New Rules for Mortgages”

Originally posted 2009-12-01 10:36:37. Republished by Blog Post Promoter

Dale Robyn Siegel is a licensed attorney in New York and owner of Circle Mortgage Group, a boutique mortgage broker in Westchester, New York. She is an adjunct professor at Baruch College as well as NYU Schack Institute of Real Estate. She is currently on a mission to re-educate the consumer about real estate finance. Dale has been speaking to the public and teaching real estate professionals about mortgage finance for the past ten years. You can learn more about The New Rules for Mortgages at thenewrulesformortgages.com, and you can purchase a copy at Amazon.com.

1. How much money will a first time home buyer need to purchase a home?

It is best to have a 20% down payment these days. The lenders will also require additional funds to cover closing costs and reserves for taxes and homeowner’s insurance. A reserve of at least two months of housing expenses is required, however I recommend having at least six months covered and in the bank. You just never know what can happen these days.

2. What changes exist to acquiring a mortgage should a buyer be most concerned about?

The borrower is qualified on their credit, assets and income under very strict guidelines these days. Not too long ago, lenders would use one strong factor to compensate for weak ones. Now, there are simply risk assessments and a good credit score might not make up a high expense to income ratio. Thus, it is easier to get rejected for a loan even if the client is almost perfect.

3. What changes have been made to the appraisal criteria, and how does it affect the buyer’s ability to get a mortgage?

Appraisals are now under the scope of HVCC (Home Valuation Code of Conduct) and are ordered by a management service company rather than the lender or loan officer. The service hands out jobs on a “round robin” system (think of up’s in a car dealer). The next appraiser on the list gets it and he/she might not be familiar with that property type or location. Therefore, the appraisal might not be performed from experience and will be unacceptable to the lender or come in low in value. The borrower bears the burden of the cost [appraisal], so they might have to pay for a new one.

4. What credit score is required to get a mortgage?

A buyer’s best asset these days is a good FICO score. If a minimum credit score of 620 is not met, there will be few lenders that one may go to (for a decent mortgage). Of course, there are plenty of lenders that will offer mortgages at different levels of FICO score, but the lower the score, the more of a down payment is required and the higher the interest rate.

5. How long does it take to close on a FHA/VA loan or conventional loan compare to the time to close those loans before the changes to mortgage rules?

I would give a loan more towards 60 days to close whereas before it could have been less than 30. The better prepared the parties are, the faster the process goes.

6. How often does the loan get denied after the completion of the appraisal? What can the buyer do to protect his or her self from the possible monetary losses?

As stated, appraisals are coming in lower than purchase prices more often than not. If this happens, the buyer has to either come up with more money or renegotiate a lower price. Some sellers are willing to reduce, other are not. If the deal goes south, the buyer does not get reimbursed for any money already spent on appraisals or engineer reports. It is simply the cost of doing business.

7. Are there other reasons that a buyer is turned down after receiving a pre-approval letter?

A preapproval is not a commitment to lend. Think of it as a review of the financial profile and a promise to work on getting a loan approval. A borrower can be rejected if the bank feels they do not qualify after they have received all of the documents. In addition, a borrower’s situation could change with loss of employment, income or a credit blemish. So, it is not ever until the fat lady sings- as they say.

8. If a buyer is turned down can the buyer get his or her money back?

Typically a contract will have a mortgage contingency clause. This will state that they have a set time (45 days) in order to make a reasonable application for a mortgage. If the borrower has done all they could and not get a loan, then they will get the down payment back. If they have done nothing to get a mortgage, it will be tough to get a refund.

9. Should a buyer get a copy of his her credit report before applying for a mortgage? If so, when should he or she get it? Who should the buyer contact to get a copy of his or her report? How does the buyer dispute incorrect information? How long does it take to correct the information?

Yes, regardless all people should get a copy of their credit report once a year just to review it for errors or changes. A free annual credit report is allowed by law from each of the three credit bureaus. This can be researched on line for easy access and information. After the report is received it should be examined and corrected with both the vendors/creditors and the bureaus. It takes about 60-90 days to show changes on a report and have a positive effect on the FICO score. So, it is a good idea to stay on top of one’s credit.

10. In your opinion, have the changes that have been made improved the mortgage industry or made lending more difficult and complicated for the consumer?

It was a necessary evil on so many levels. The bad apples had to be weeded out of the industry, the lender portfolios needed be flushed of bad loans and non-qualifying borrowers needed to be deterred from getting mortgages. On the downside it does eliminate many good qualified borrowers which is having a crushing effect on the real estate market. However, once this is over and we are back to reality, the ride will be smoother and smarter just ahead.

A Real Estate Broker Reviews “New Rules for Mortgages”

Originally posted 2009-12-01 10:42:08. Republished by Blog Post Promoter

Dale Robyn Siegel, the author of New Rules for Mortgages, utilized more than her professional experience to explain the new rules of acquiring a mortgage, but she utilizes technical aptitude and business savvy that keeps the reader wanting to know more about the not so easily explained topic of mortgages.

From the table of contents, the reader will be mesmerized by the organization and thought that went into answering the question of “what are the new rules of acquiring a mortgage”?

The reader will learn just by reading the table of content that the credit score is the driving vehicle of acquiring a mortgage followed by income.

Next, the reader will learn that the property or home matters. The author reveals tips on how to avoid over paying for home inspections and home appraisals while getting the home of your dreams.

More importantly, the reader learns that he has a choice in mortgages. More often than not, the buyer is not giving choices, but told “this is the only product that available for your situation.

The table of contents goes on through the process of purchasing a home up to the buyer receiving the keys that approach adds value and gives the buyer an educated view of the buying process as opposed to the “just sign here” approach.

You may be wondering why there were several paragraphs about the table of contents. Well, the table of contents conveyed to me if the writer understands the buying process. If the book started by talking about the mortgage products then that conveyed only a desire to give typical information; however, it starts at the level where the buyer starts at the credit score thereby conveying a desire to empower the buyer. As the old adage says “knowledge is power.” In the first few paragraphs and first few sentences of the book, Siegel continues on her quest to give the buyer power by revealing the origins of a mortgage.

Next the reader learns how the credit score is used to reveal to the lender the level of risk associated to lending to a buyer.

As a matter of a fact, the higher the credits score the lower the risk. This information believe it or not is one of the new rules of acquiring a mortgage because now a buyer can get a lower interest rate based on a higher credit score and the loan to value of the mortgage. The reader learns that latter approach is termed “tiered price ranging of a mortgage.” Before this change everyone that was approved got the same rate regardless of your score.

Unlike most books written on the subject of mortgages, this writer empowers the reader with golden nuggets of information on the dos and don’ts pertaining to correcting bad credit and/or for maintaining good credit.

The book continues to reveal obvious ways and some not so obvious ways to maintain good credit. For instance, most buyers may not know the weight that certain activities have on their credit. Siegel reveals the weight and what are good practices to utilize to take advantage of the weight.

Still yet, the buyer is warned and given the reason why acquiring new credit during the buying process is frowned upon by the lender. Siegel realizes that most buyers do not realize that lenders view new credit as “credit stoppers”; therefore, she takes the opportunity to explain in a no nonsense matter how and why the lender feels that way about obtaining new credit in the middle of purchasing a home.

The most important information in this book may be the tactics that are revealed to correct bad credit, and the information on how long those bad activities will affect the buyer’s ability to acquire a mortgage.

Another equally important fact that the book reveals is how debt to income is used to ascertain the buyer’s qualification for the mortgage.

This book is a must read for anyone looking to acquire a mortgage. Armed with the information and tips revealed in this book the buyer no longer have to feel that acquiring a mortgage is an “engagement” of war of the borrower against the “mysterious” mortgage rules.

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A Bankruptcy Does Not Have to End Your Credit Life

A bankruptcy does not have to end your credit life.  Did you know that you can apply for a mortgage after only four years if you file a Chapter 7, 11, or 12 bankruptcy and two years after a Chapter 13 bankruptcy?  However, to be eligible you must do certain very simple but important things.

First, you must re-establish your credit right away.

Secondly, send a copy of the discharge letter and list of creditors included in the bankruptcy to all three credit bureaus, and request that the bureaus update your credit report to show all creditors involved in the bankruptcy balance as zero and request the bureau to list all creditors involved in the bankruptcy.  By completing the latter it will demonstrate that the creditor is no longer owed.  Once this update is complete you should receive an updated copy of your credit report.

Once again, the three credit bureaus are:

• Experian
• Equifax
• Transunion

Do not give up on every purchasing a home just because life happened and you had to file a bankruptcy.  Just remember, that paying your rent on time for at least 24 months gives you alternative credit that may help you to be able to qualify to buy a home.

Still yet, paying your utilities, car insurance, cell phone bill, etc. on time are also alternative credit or industry termed alternate trade-lines of credit.

If you are interested in more tips similar to the tips above, then purchase and read, Dale Robyn Siegel’s new book, The New Rules for Mortgages.

She has 28 pages dedicated to help you improve or maintain your credit so you can purchase or refinance a home.  Purchase it today at a bookstore near you.

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