“Joint Credit Cards”
Avoid setting up joint credit cards whenever possible as this can create future financing problems.
This couple had half a dozen credit cards and all of them were joint cards. They decided they wanted to purchase a home, but the husband had defaulted on a mortgage a few months earlier and his credit scores were so much lower than hers, so we couldn’t put him on a mortgage.
The wife made enough of an income to qualify for a mortgage, however because the credit cards were joint all of the obligations had to be counted into the debt ratio. The bottom line, she didn’t qualify as her debt ratio was higher than what was allowed.
If half of the cards were in his name, she would have qualified just fine. We are now looking to get a mortgage done with a non-occupant co-borrower, but all of this could have been avoided.
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“Hold Harmless Doesn’t Really Mean, Hold Harmless”
Being a mortgage broker I have seen the good, the bad and the ugly when it comes to divorce decrees. I know that in most cases, the attorneys and the judges are well meaning but I have often wondered if they all really understand that the words, “Hold harmless” doesn’t mean a damn thing.
The divorce is complete and two people are now going to move on right, wrong. Twice this week I have gotten calls from potential clients that wanted to purchase homes and each have exactly the same problem.
In the divorce decree, the ex is now responsible for the existing mortgage and neither has done what they are supposed to do which is to keep the mortgage current. The problem is that the other person is still obligated on the mortgage and the late payments show up on their credit report, so much for “Hold harmless”.
The “Hold harmless” agreement is worthless as the lender never agreed to take one party off the debt. When these agreements are made, it is with good intention most of the time, but life happens.
I consult with many divorce attorneys and clients and always recommend, whenever possible to get a refinance done prior to completing the divorce. It is not always possible but when it is, it solves potential problems before they are created.
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“How often do You Clean up Your Database?”
Every couple of months I take the time to purge my referral partner database. Here is what I mean: if there is someone that I have not interacted with in a couple of years I ask myself; Do I want them in my database? Do I need to contact that person just to say hello or how are you doing? When was the last time I gave that person a referral? Would I want to give this person a referral?
Last week I was working on my database and a name popped up that I felt needed a call. I reached him on his cell phone, we spoke for a few minutes and I ended up receiving some information that I didn’t have before. Besides being an electrician, he is now doing fire alarm systems. I definitely wanted to keep his information.
As luck would have it, I had an opportunity to share his contact information with a client that was looking to have a fire alarm system installed. I made the introduction by email, which was a great feeling.
A couple of hours later I got a call from one of the electrician’s employees who told me that he and his fiancé were planning on buying a home later this summer or fall and asked if I could handle the mortgage. Just a coincidence? I don’t think so.
Do you take the time to clean up your database and make the time to speak to your referral partners?
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“Shopping for the Lowest Rate”
I did a pre-qualification for a client a few months ago. As part of the process we discussed interest rates and a monthly payment that would be comfortable for him. I explained that interest rates were starting to move upward and to keep that in mind.
I had reached out to him a couple of times as a follow up, but was not able to reach him. I finally spoke to him and he told me that he had found a home and had been working with a loan officer that was in his Realtor’s office, but things were not going well.
He told me that he had also been pre-qualified by the loan officer in his Realtor’s office before we had spoken and decided to go that way, as they offered a lower interest rate. Two issues arose that weren’t expected, the job history was a problem as he wasn’t in his current job long enough for this lender and part of the gift money was cash and couldn’t be properly sourced. The bottom line, he wasn’t sure that he was going to get the mortgage.
I gave him some coaching as to how I would handle these two issues. Hopefully the suggestions will work for him. Shortly after we spoke I got this email from him. Hope it all works out for him.
Thank you Joe.
It is clear to me at this point, I made a mistake. My interest rate should not have been the only reason used to select a loan officer. I should have paid more attention to my sister that originally referred me to you.
Not sure if things will work out with my current situation, but really appreciate you taking the time to give me some advice. No matter what happens from here, you will get referrals from me as well.
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“Why Don’t More Multifamily Homeowners Refinance?”
I am always amazed when someone comes to me for a new mortgage that currently has a high interest rate on their property and they are not planning on selling. So often the property is a multifamily that was originally financed with an FHA mortgage. This is so crazy when the plan is to keep the property. But they are not aware that an FHA streamline mortgage can be done. It doesn’t matter if the property has equity or not.
Carlos was paying 6.75% for a rate. The refinance was going to save him $400 per month, nearly $5,000 per year. That is pretty good, I would say. His new rate was going to be reduced by 3%.
I see these situations all of the time. In most cases folks don’t think they can refinance their multifamily home. Here are some of the reasons:
1) I owe more than the property is worth.
2) I don’t want the lender to know I’m no longer living there.
3) I had a late payment(s).
4) There are many more reasons that folks tell us, but none of them will preclude them from doing a refinance.
If you know someone that could use my help, have them contact me.
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“What Underground Oil Tank?”
I got a call from a client that has a home under deposit. They wanted to buy in this particular neighborhood as they have a couple of friends that live there. Over the weekend they were at a cookout and one of the neighbors mentioned an “Underground oil tank” at the property.
The clients called and asked me if the underground oil tank is something they should be concerned about. I recommended they contact their Realtor to find out if the tank had already been removed or if it was still there. Sure enough it was not removed and it was never disclosed.
The buyer and their agent told the selling agent they want to have the tank removed prior to closing or they are not moving forward with the purchase, even though the mortgage was already approved.
After lots of back and forth the seller agreed to have the tank removed. The closing was postponed for 2 weeks. Hopefully all will go well with the process.
How would you have handled this situation?
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