Your Questions About Mortgage Loan Originator

Daniel asks…

Is it legal for a Bank to move my account to a different bank without my permission?

After my graduation, I consolidated my Student Loans with ISM Loans. Today, I tried to accesss my account online to make a payment but couldn’t access my account. I called ISM. They told me that my account was moved to an X bank and that my payments should be sent to X bank.
Is this legal?

John answers:

It’s common practice among banks, even loan originators and mortgage loans.

Banks typically sell your debt to another financial institution, so you now need to pay to that new institution.

It’s perfectly legal. There’s a huge market for debt buying and selling.

Laura asks…

How to obtain financing for remodeling a house that I just bought?

I am going to buy a fixer upper and want to customize the house as per my specific needs.

How do i obtain financing for the remodeling since I will have only 10% equity (which is the downpayment) in the house?

Does the remodeling company offer financing?
Can i get a loan from the mortgage company itself to remodel the house? I don’t have equity in the house so if there is a provision to do something like this then can someone please explain it to me

Thanks

John answers:

Have you already bought the house and get the mortgage yet ?

Before the financial melt down, this is how it go down.

Get a house with first mortgage with what ever down payment you have.
Obtain a second mortgage to withdraw your equity. Sometime the loan originator and homeowner and home appraiser / inspector or valuator will conspire to inflate the house value so the home owner can get 2nd mortgage that is beyond their equity.

Don’t know if any bank will still play that game
Simply put the game is
1st mortgage for the value of house – the 10% down payment you put down
2nd mortgage for the 10 % equity (from your down payment)
thus 100 % financing.

Or if you have good job . Good credit . You might be able to get a signature loan. And do the remodeling.
Then
Get another appraisal and a different mortgage loan to cover the newly remodeled house ( the value has just gone up because you remodeled it )

But you can also
just get the 1st mortgage and live in that house and take one project at a time. Without taking out a big loan.
Maybe in a year or two you will be done .

Good Luck

Ruth asks…

Too much debt to qualify for a mortgage?

My fiance and I are planning to buy a 140k house this summer. Combined, we make 65k/year and have 5k in credit card debt. His credit score is 620 and mine is 705. Would it be worth using our savings to pay off debt before we apply for the loan or would we still qualify without paying the debt? We were hoping to keep the extra 5k in savings as a safety net/better cash flow…

John answers:

I am a mortgage originator. My advise to you is to keep on saving as much as you can so you can put 20% down, Less than 20%, you will have to pay mortgage insurance. Banks, take a look at your payment history, your devt to income ratio and the Loan to Value. You can also, finance 80% with a first mortgage, 10% as a second and then 10% down to avoid Mortgage Insurance. Also, don’t forget about the closing costs. So keep on saving as much as you can. Call your credit card company and negotiate your rate.If you are a first time home buyer, you may want to consider CHAFA and search for down payment assistance program,. DAP

Lizzie asks…

Is now a good time to buy a house and take on a mortgage?

Georgia, USA
first time buyer
single family unit

Please explain and also if you have tips for getting a good mortgage.
Thanks you in advance!

John answers:

As an FYI… per the Federal Trade Commission (FTC) http://www.ftc.gov/freereports , there is only one source for you to get a free credit report from all three credit repositories, “annualcreditreport.com”. Https://www.annualcreditreport.com/cra/index.jsp

Do not give anyone else your personal info without seeing them in person.

Make sure to price out your loan with your LOCAL banks and mortgage brokers only.
A lot people giving advice on here are also looking to give you a loan (it’s not advice, its advertising), if they are not local to you and you can’t get to them within 1 hour don’t fall for it. They say they are licensed in all 50 states, what does that mean? Which state do you have to look in first if something goes wrong? KEEP IT LOCAL; DON’T GET RIPPED-OFF BY SOMEONE IN WHO KNOWS WHERE WHICH YOU WOULD HAVE NO DIRECT ACCESS TO.

Remember Buddha’s advice:
“Believe nothing, no matter where you read it or who has said it, not even if I have said it, unless it agrees with your own reason and your own common sense.” You are the only “expert” you can trust: All brokers, and every other loan officer guru giving advice here with a .com or contact me at the end is “selling” you something (it’s not advice, its advertising). Don’t buy “it.”

When shopping for a mortgage, here are a few things to do to maximize your savings and time:
1. When asking for a Good Faith Estimate(GFE), tell each mortgage originator (lender) what interest rate to use so you can compare apples to apples (rate affects closing costs). This is probably a different thought process for you because you always shop interest rates on a mortgage right? Remember all mortgage originators have identical wholesale interest rates. If you shop the same interest rate among mortgage originators, it levels the playing field and discloses what they want to charge you for their time to originate and close your mortgage. It is similar to shopping for a car. Why does the exact same new car vary in cost from one dealership to the next? Some dealers want to make more profit than others.
2. Secure Good Faith Estimates from various mortgage originators within a 4 hour time frame (rate and pricing can change daily and even multiple times in one day).
3. Do not compare the prepaids, reserves, escrow, title charges, and government recording sections of the estimates; third part fees are not controlled by the mortgage originator.
4. Ask each mortgage originator to base the interest rate on a 30 day lock unless you need longer.
5. If the loan allows you to waive escrow (paying taxes & insurance yourself), let the mortgage originators know because this will affect closing costs.
6. If refinancing, let the mortgage originators know if you are pulling cash out. A cash-out refinance usually increases closing costs.
Your Biggest Challenge
The mortgage industry today has never been more unethical. The industry has produced several record-breaking years in a row regarding total origination and as a result, greed is driving the industry. Your biggest challenge is receiving a Good Faith Estimate that is provided to you in “Good Faith”! We spend more time showing consumers how mortgage originators are lying to them in regards to an estimate given! That’s right, lying! “Bait and switch” has become a prominent sales tool in the mortgage industry. Bait you in with a bogus estimate then switch things after you are hooked. This is so discouraging; banks and so called direct lenders have become some of the worst at this practice. Education is your biggest weapon against this practice. Take the time to fully understand closing costs and rates before proceeding.
You should know exactly how much the mortgage originator is getting paid by all sources (no matter where it comes from, it’s ultimately coming out of your pocket). Protect yourself by asking for and receiving prior to application and origination a written guarantee stating the TOTAL amount of compensation (YSP, rebates, commissions, kickbacks) that will be received and kept by the mortgage originator. This will help assure that your best interest is kept in mind.
Originating a mortgage is a service, not a product; compensation should not be based on the loan amount or interest rate.
All ethical, honest, upfront, transparent mortgage originators will be more than willing to provide you with a written total compensation guarantee in addition to the (GFE) Good Faith Estimate (focus on the word “Estimate” because that is exactly what it is, an estimate of charges) prior to originating your loan.

Joseph asks…

what are the qualifications required to be a loan originator?

I mean…do I need special education? What are the illinois state requirements?

John answers:

In most cases, you don’t need special education or background. However, previous experience in sales, finance or real estate help. I would suggest you look for an online or attendee type seminar. If you research it, you’ll find several. In some states you may be required to obtain a mortgage loan officer license. You can usually contact the Department of Real Estate in your state for that confirmation. Many mortgage brokers and lenders will hire inexperienced loan officers and offer them a significant amount of training, however be aware that most do NOT offer a salary. This is a commission based industry and most companies require you to work without compensation until you produce your own loans. That can mean 2, 3, or 4 months without an income. It’s tough and there’s a lot of turn over in the industry as a result of that issue. If you have some experience in sales, finance or real estate…some lenders, like Countrywide and Wells Fargo as an example may hire you and give you the training AND pay you a small guaranteed salary for a period of time until you are on your feet.

Good luck.!

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