Issue 41.16
Today when it comes to financing your home either with buying a home today or refinancing a home today, it seems the paperwork is over the top and it feels like the e needs list never ends.
We see all of the ads on television talking about a rocket mortgage or a quick and easy mortgage. Just apply on line- right?
There are some fundamental issues with doing so and I hope that everyone understands it just does not work that way today like it is advertised on T.V. for a good reason:
- Today 90% of all conventional mortgages are sold to Fannie Mae or Freddie Mac. The other agencies are FHA, VA and USDA etc… or government loans. But, the conventional loan today is underwritten essentially by automated systems today that all banks and credit unions and lenders need to abide by.
So, from an underwriting standpoint, just about all lenders need the same information in order to fund and close a conventional loan today. So, the Rocket Mortgage process may involve applying on line and scanning all of your documents on line and passing them through the internet services etc… That does not seem like common sense today or anything rocket or quick about that process.
The process to finance a home today is fairly simple, but very much paperwork involved with taxes and bank statements and full disclosure of income and accounts. So, without assets, and income you cannot fund a conventional loan today. So, in essence, whoever is funding your conventional loan will need the same paperwork. So, you can work face to face or email everything and trust the internet services as well as confidentiality as well as put up with the hassle of trying to send every document under the sun via email.
- The second issue with a quick and easy loan or over the internet is simply the advice you are getting or not getting.
Today, Government regulations have incorporated standard APR’s among loans that consumer can shop and compare lenders from a cost standpoint to an interest rate standpoint and it is built into an APR or annual percentage rate. The keys are two things.
- Shopping APR’s in cost and rates is complicated. This loan today will be based on a loan amount as well as credit scores and other risk factors. So, no single borrower will essentially be the same because of the variable within each loan. Trying to shop loans is a complicated process, and I advise all consumers to do so. But, do so in company’s you can talk to, trust in and sit face to face with so you know better and understand better what we are comparing and shopping.
- Second the internet loans today take out the consulting or advisory role of a mortgage or investment planner. This is the single biggest mistake we make as consumers today on a mortgage. Please visit with a financial planner or registered investment advisor and mortgage planner when considering long term financing. Different loan types and programs and fees make this the most critical aspect of financing a home today.
In watching our financial health this fall and re-evaluating our mortgage because of today’s low rates. Please visit with a financial mortgage planner today and get second opinions on anything you do with a decision as such importance of financing a home, but the internet services, really don’t save money, and certainly don’t save time and worse you are not getting professional advice on a consistent basis.
Until next time. Brandon Hansen.