The Lending Geek

Prepayment Penalties

Adam — Fri, 02 Mar 2007 15:00:13 +0000

The word “penalty” usually drums up less-than-stellar images in one’s mind. So why are loan brokerages and banks so quick to attach penalties to your loan, after having jumped through so many hoops just to procure it? The answer is not clear-cut, but there are a few common reasons you might have to deal with one.

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Fannie Mae Releases 2007 Conforming Loan Limits

Adam — Sun, 17 Dec 2006 15:00:07 +0000

The Federal National Mortgage Association, sometimes known as FNMA or “Fannie Mae,” a corporation sponsored by the U.S. government, recently released the conforming loan limits for 2007.

The conforming loan limit is the maximum dollar amount of a loan Fannie Mae will purchase to be bundled up in the secondary mortgage market to be sold off as a mortgage-backed security. This limit is broken up into four categories: one-unit properties, two-, three-, and four-family properties. It is also further separated by state/territory (Alaska, Hawaii, Guam, and the U.S. Virgin Islands share a limit 50% higher than the rest of the country). For most purposes, the one-unit (single-family property) is the limit to consider.

What does this mean for borrowers? It means any loan amount falling into the annual limit will have a better chance of ultimately being sold to Fannie Mae, which usually means a lower interest rate on your loan.

There are two commonly used terms when describing loan sizes: “conforming” and “non-conforming.” Non-conforming loans are also sometimes called “jumbo” loans. If your loan amount is above the conforming loan limit, you can expect to have an interest rate anywhere between 0.25% to 0.75% higher than if it fell into the conforming limit.

Here are the 2007 conforming loan limits, which are the same as the 2006 limits:

One-unit:	$417,000
Two-family:	$533,850
Three-family:	$645,300
Four-family:	$801,950

Uneducated Buyers Prone to Mortgage Fraud

Adam — Tue, 14 Nov 2006 15:00:10 +0000

The concept seems simple and self-explanatory: not being correctly informed when making important decisions may lead to people taking advantage of you. The mortgage industry is rife with problems in this area, and it should be our duty as mortgage brokers and loan agents to educate buyers in making smart decisions.

News arrives every day of new scandals. Lately, a recent trend seems to be inflating property values of distressed homes through the use of untrustworthy appraisers (Article 1) (Article 2).

The Lending Geek hopes to provide you with all the information you need to make informed decisions about home loans. The mortgage industry has been thriving off of ignorance for too long. It’s time to stop preying on people and help them instead.

Points: When are they OK?

Adam — Tue, 31 Oct 2006 15:00:55 +0000

When a loan agent starts talking about a “loan origination fee” or “points,” a signal may go off in the borrower’s head alerting her to a problem. These two things (which are the same thing) have been recently ingrained in many of us to represent a red flag, and for a very good reason.

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The No-Cost Loan

Adam — Sun, 03 Sep 2006 15:00:58 +0000

Telling someone I work using the “no-cost loan” principle usually leads to the feeling of “there’s gotta be a catch.” When you tell someone something that sounds like it’s too good to be true, it usually is. Fortunately for my borrower (but unfortunately for me to have to convince them), it really is just that.

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Broker fees explained

Adam — Thu, 24 Aug 2006 02:58:08 +0000

So how do you know whether your broker is treating you right? You check the “Good Faith Estimate” you [should] receive within three days of submitting an application with any loan brokerage. Without an explanation of this form, however, you might as well be signing a document written in a foreign language. In this article, I’ll do my best to dissect these fees and give you an understanding of what needs to be there, what might be there, and what should not be there.

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Choosing a loan agent

Adam — Fri, 18 Aug 2006 02:55:27 +0000

I am a real estate salesperson. What this ultimately means is that I can both act as an agent in the buying and selling of real estate and I can also originate loans, including construction loans, rate/term refinances, cash-out refinances, purchase money mortgages, etc. There are tons of licensed real estate salespeople in California, but there are also a bunch of unlicensed agents doing business under a bank’s corporation license. This only comes into play when you’re talking about loans, because all real estate agents must be licensed to sell houses.

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