Home Loans - Back to Basics

A lot of the national headlines of the mortgage industry can give a person a very empty feeling. With the count of lenders that have closed reaching 115, see http://www.lendersimplode.com/, a majority of the public believes the mortgage industry is on the brink of collaspe. They believe this because they read headlines. Log on to your computer, open your news paper, ask your neighbor, all accounts point to failure in the mortgage market. American Home Mortgage just shut down, 10th largest mortgage company in the country, over 7000 employees with no jobs. There are up to a 114 companies just like AHM. I ask the question as to why? And is this really a problem?

Why are companies closing down?
1. Greed. Most companies leveraged themselves to try and take advantage of the profitable mortgage business, and when the investors said no thanks companies are left holding the bags, out of business.
2. Greed. A number of these companies disregarded the fundamentals of mortgage underwriting and where faced with buying back loans underwritten on their wholesales lending lines of credit.
3. Greed. When you put a customer in a home with no money down, that home is losing value, the customers credit worthiness is in question, it makes for a dangerous combination. This was done time and time again over the last few years. The companies doing these loans, see lenderimplode.com

Is this a real problem?
1. Yes- In the short term, 1-2 years, people will loose the money they had invested in the AHM's, jobs will be lost, peoples will not be able to keep there homes, and others will not qualify under new guidelines for future home purchases.
2. NO - Those new guidelines I just mentioned are actually the guidelines from 5 years ago. The guidelines before too many companies got carried away with GREED.
3. NO - It is back to basics for all of us.

My business partner, Phil Lechter, worked at the Rich Dad company for 7 year before we created Community First Financial. If you know anything about the Rich Dad company and the books they have written you understand what basics are, but let me brief them for you.

What are Basics?
Educate your self about the process of buying real estate.
Build your team of advisor's to help you with the process.
Identify the correct properties at the correct prices
Have yourself ready to buy- financially, emotionally, and physically.
Continue your education of real estate

Best of luck in your real estate adventures.

Troy Schuricht
http://www.communityfirstfinancial.com/

The Challenges of a Construction Loan

People often ask me why construction loans are so difficult? One would think this is a question a potential client, building their first home, or maybe a Realtor new to the construction arena would ask. Unfortunately this question I get asked most by colleagues in my profession. Loan officers, processors, and senior loan managers are just a few that are confused by construction loans.
Let me give a little insight to why construction loans are very difficult to figure out (even for those in the mortgage profession).
There are more variables to consider.
Is the land already owned? If so when was it bought, how much, and what is the value?
What are the soft construction costs?
What are the hard construction costs?
Have any items been prepaid?
Do you have a General Contractor?
Is he approved to business with the lender?
Do you have plans?
Permits?
Any work started?
Do you have working capital?
Do you need an interest reserve account?
Do you need anything refunded at close?
Do you know how many draws you need?
This list could go on and on. My point is the amount of additional work that a construction loan requires is much greater than your last purchase or refinance. Keep in mind the mortgage a typically person completes has close to 35 people touching that transaction. With a construction loan there are even more associated with your file.
If any of this has you scratching your head you are not alone. Construction loans are dominated by a few select individuals because they are a special transaction. If anyone needs any more insight to my comment please let me know.
Best of Luck,
Troy Schuricht
http://www.communityfirstfinancial.com/

How to choose a Construction Loan Specialist

How to choose a Construction Loan Specialist
How special are construction loans? In a report from Countrywide Home Loans, only 1 in 10 loan officers do more than 1 construction loan per year. So less than 10% do more than one loan per year, this makes finding a loan officer that is experienced with construction loans very difficult. Like all advisor's associated with real estate, loan officers should be interviewed by potential clients. Here are a few questions that individuals seeking a construction loan should ask their future loan officer candidate:
1. How many CONSTRUCTION loans do you close PER MONTH? - Experience is everything.
2. How many sources do you have for construction loans? - More sources = more options.
3. Can you provide testimonials and references? - Word of mouth from someone else.
4. Go on-line and do a little digging. - The Internet is a great tool for information.
5. Be-careful about on-line applications for construction loans. - Most sites are lead sites and not actual mortgage companies that specialize in construction loans. Your information is collected and SOLD.
Feel free to ask any question any time.
http://www.communityfirstfinancial.com/
http://yourlendertroy.blogspot.com/
troy@yourlendertroy.com
Best of Luck,
Troy Schuricht