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Accounting, Digital, Broker Comp Tools; FHA, VA, USDA Developments; Why Rates are Stubborn

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Accounting, Digital, Broker Comp Tools; FHA, VA, USDA Developments; Why Rates are Stubborn

By:
Rob Chrisman

4 Hours, 13 Min ago

Imagine my surprise at finding tag (like on the playground) is an organized sport. Imagine my surprise at finding two gas stations at the same intersection yesterday in Truckee, California with two different prices for unleaded! Rather than wait for the CFPB to tell me that I could save money by going to the cheapest station, as it did by paying for a study on how different lenders have different mortgage prices, I actually reasoned, all by myself, that I could, and did, buy the least expensive gasoline. Switching gears, but continuing on with the thinking vein, a lot of reasoning went into determining that a) the earth is round, and b) globes are not some newly invented conspiracy theory. Someone needs to let Georgia’s current GOP district chair Kandiss Taylor know globes are globes. What the heck am I missing by subscribing to the round earth concept? And how about this for sensationalist headlines from Auction.com: One-Third of Buyers Expect Home Prices to Decline. Really? “Despite rising expectations for a home price correction in 2023, 87% of buyers said they planned to increase or keep the same their property acquisitions for the year, up slightly from 86% in 2022.” (Today’s podcast can be found here and this week’s is sponsored by Built Technologies. Join Built Technologies on June 20th at 12 PM CST for an exclusive webinar that will dive into proactive portfolio monitoring as Built’s experts share best practices for achieving greater visibility into your construction portfolio.)

Broker and Lender Services and Software

Quorum Federal Credit Union has upgraded its Borrower Paid Broker Compensation Program. The program offers partners the opportunity to earn up to 2.00 percent borrower paid broker compensation on the entire line amount, up to $5,000, for all HELOC products. Primary and Second Home HELOCs offer no minimum draws, no early termination fees, and no annual fees. With minimum loan amounts at $25,000, Quorum offers financing up to $350,000. Investment Property HELOCs also offer no minimum draws and no early termination fees with minimum loan amounts at $50,000 and financing up to $250,000. Contact your Account Executive, visit the Quorum Partner Portal or email [email protected] for more information.

“Unite your mortgage process with an end-to-end digital closing solution. Initially, American Federal implemented the Mortgage Suite without Blend Close, but later realized our digital closing solution aligned with their growth strategy. Find out how they were able to speed up the borrower’s journey, close loans faster, and save more time. Dive into their case study.”

For independent mortgage banks coping with shrinking production volumes and rising costs per loan, outsourcing accounting is an elegant solution to what’s become a very common challenge. Whether you have no accounting expertise in-house or you have a new team with no mortgage experience, you can tap the Richey May Client Accounting and Advisory Services (CAAS) team for the support you need. This team is stacked with mortgage industry experts who can tailor your solution to meet your most pressing needs in a volatile time, with no training needed. Need help transitioning to loan level accounting? Need a fully outsourced function? You got it! Need industry training for your controller? We can do that. In this article, Richey May’s expert Kim Dittmer answers all your most frequently asked questions around outsourced accounting as a mortgage bank.

Ginnie, USDA, FHA, and VA Updates

The industry’s applications include about 25 percent VA, FHA, and USDA. These products continue to garner the lion’s share of production for underserved and, let’s face it, low-quality borrowers. These are the borrowers targeted by the Biden Administration. Freddie and Fannie (the GSEs) ask seller-servicers for these “mission loans” but LOs know that there are few cases where a lender could or should advise a consumer to take out a conventional loan versus FHA/VA. Let’s see what’s going on out there.

Anyone making a living on refinancing FHA or VA loans is in for a rough road. Overall, roughly 33% of all American homeowners wrapped into 30-year agency mortgage bonds are paying 3% or less on their home loans. Chris Maloney with BOKF writes, “Breaking that down across the three segments for how much of the universe is paying 3% or less on their mortgages as of the end of May, for conventional 30-year borrowers that comes to 32%, for FHA 30-year borrowers 21.9% and for VA borrowers 50.7%. And using the Optimal Blue lending rates as a guide, the amount of the 30-year universe that is out-of-the-money (defined as not having at least 50 basis points of incentive) finds 99.6% of the conventional 30-year and FHA borrowers in that state while for the VA borrowers it’s 99.5%.”

FHA posted a draft of Mortgagee Letter (ML), Payment Supplement Partial Claim, on its Single-Family Housing Drafting Table (Drafting Table) for public feedback. The draft ML proposes a new loss mitigation option, the Payment Supplement Partial Claim (Payment Supplement PC), to assist struggling borrowers that are delinquent on their mortgage payments and are unable to obtain a significant payment reduction with other available loss mitigation options. This option will be particularly useful for borrowers who have below market interest rates. View the FHA Press Release for details.

Don’t forget that the FHA is seeking comments on its proposed HECM Mortgagee Default Requirements. FHA recently posted a draft Mortgagee Letter (draft ML) that would expand FHA’s processes related to actual or anticipated mortgagee default on obligations to a borrower under Home Equity Conversion Mortgages (HECMs) insured by FHA.

At the end of May, The Community Home Lenders of America (CHLA) commended FHA Commissioner Julia Gordon for the announcement that FHA is proposing a program to create a flexible partial claim loan modification option for defaulted borrowers, which avoids having to take the underlying loan out of a Ginnie Mae loan pool. CHLA was the first national association to ask FHA to develop such a program option, in a letter to FHA last August.

All Participants Memorandum (APM) 23-08, Ginnie Mae announced updates to the adoption of Single Family and Manufactured Housing Program pooling into the new Single Family Pool Delivery Module (SFPDM) in MyGinnieMae. This transition from GinnieNET to the SFPDM application will enhance user experience and align Ginnie Mae with mortgage industry standards by using the MISMO-compliant Pool Delivery Dataset (PDD).

USDA Rural Development posted a bulletin on 05/30/2023, Interest Rate Decrease for SFH Direct Programs.

FHA announced the availability of 203(k) Rehabilitation Mortgage Program fact sheets for consumers and aspiring and current FHA203(k) Consultants. These materials are designed to help increase awareness and understanding of the features and benefits of the program. The fact sheets include a program overview with features, benefits, and requirements, as well as additional 203(k) Program resources.

PRMG Product Update 23-29, includes Investor Solution update on AirDNA requirement for short term rentals on a purchase. Clarification on UT Utah Housing FHA for wholesale loans regarding the allowance of In-House and Third-Party Processing Fees charges, and multiple clarifications on CO CHFA FirstStep Plus.

AmeriHome Mortgage General Announcement 20230512-CL summarizes previously published changes made during May, additional changes made with the announcement, and recent Agency and regulatory news.

Capital Markets

Why did rates improve Thursday, and this week, especially when there is no “big” data? Well, initial jobless claims, which are a leading indicator, hit their highest level since November 2021. That connotes some softening in the labor market which the Fed would like to see, and which could tip it toward holding, rather than raising, the overnight Fed funds rate.

Supply is also on the radar screen but expected. Investors remain cautious ahead of next Wednesday’s Federal Open Market Committee meeting and fears about the impending sale of $1 trillion of Treasury bills is also not helping sentiment: With the debt ceiling deal in place, the Treasury will issue more than $1 trillion in short-term debt to keep the lights on. This will push up short term rates at least in the near-term, which won’t help those looking for mortgage rate relief.

In addition to rate worries, as mortgage-backed security spreads remain at the widest levels since the 1980’s, home prices continue to move higher. Lower mortgage rates earlier in the year likely played a role in the uptick, however scarce supply of desirable homes continues to add to price pressures. A strong job market helps housing demand, particularly in the face of challenging affordability and last week’s release of the May employment report generally showed a healthy labor market, with the headline reading coming in around 145k above analysts’ estimates to register at 339k. Despite that new robust employment data, downward revisions to earlier numbers suggest a broad cooling trend remains intact. The numbers now show the US added an average of 182k private sector jobs in the past three months, the fewest since January 2021.

Despite a strong labor market, consumer sentiment also slipped in May to register down 9.1 percent from April, according to the University of Michigan Consumer Sentiment Survey. Inflationary expectations for the near term fell, while longer-term expectations rose to 3.2 percent, the highest level in 12 years. The Fed pays close attention to the UM inflationary expectations, so this is bad news for those hoping for rate cuts this year and does not bode well for those hoping for a sudden window of billions of dollars’ worth of mortgages coming into refinance incentive again

Lastly, while we’re waiting for all those recession predictions to come true, yield curve inversion has increased over the past couple of weeks as the market continues to capitulate to the Fed’s “higher rates for longer” message. The latest run up in rates over the past couple of weeks was a function of the market correcting its Fed Funds “hike, pause, cut” path. That upward pressure on the front-end of the yield curve immediately re-flattened the yield curve back into deeply negative territory.

Moral of the story: the Fed is not set to cut rates anytime soon as inflation remains an issue and investors have been forced to unwind bets that rate cuts will be in store later this year. As recently as a couple of weeks ago, three rate cuts were expected before year end. With no economic data on today’s schedule, we begin a slow news Friday with Agency MBS prices worse about .125 and the 10-year yielding 3.74 after closing yesterday at 3.71 percent; the 2-year’s up to 4.55 on continued inflation worries.

Employment

Village Capital & Investment is excited to announce that Pete Tamoney has recently been hired to help grow its Correspondent Lending division. Pete has been in correspondent sales for 20 years, most recently with Northpointe Bank. Village Capital is a GNMA buyer with no overlays and a consistently strong execution. You can contact Pete.

“Equity Resources is pleased to continue our expansion throughout our 19 states along the east coast and mid-west. We are an independent and family-owned mortgage banker that is proudly celebrating our 30th anniversary this year, continuing to create incredible opportunities for our team members, Realtor partners, as well as our B2B partners. We are currently searching for talented and career-focused loan officers that have a demonstrated “self-sourced” business philosophy. Equity Resources is an agency direct lender that offers an exceptional compensation and marketing platform for our loan officers, including a media and video production team, an underwriting “hotline,” a talented marketing and social media group, and an exceptionally tenured leadership team. We offer a full suite of loan products and programs (including several specialty lending programs). To learn more about “Why Equity Resources” and to join our award-winning team, please contact Tom Piecenski, EVP of Sales and Development (614.327.5353).”

“Are you frustrated as a retail loan officer or mortgage banker with the lack of flexibility to provide custom loan options? Take control: follow the lead of over 24,000 MLOs like you who have joined the wholesale channel in the last year. Whether you open your own independent mortgage brokerage or join a team as a loan officer, you’ll have the ability to provide your clients with the personalized solutions they need. Contact our team at BeAMortgageBroker.com today and you’ll be well on your way to a more fulfilling tomorrow.”

A Louisiana based full-service, independent mortgage banker averaging $1 billion in production annually is searching for a proven retail sales leader to run all business development initiatives. The Sales, Recruiting, and Marketing departments will report directly to this head of business development role, and the role will report directly to the CEO. The ideal candidate will have a demonstrated track record of hiring and managing multiple production offices across several states. The IMB is well capitalized, has agency direct approvals, offers niche products, significant technology advancements and a world-class operations team with experienced, tenured sales and fulfillment employees. For confidential consideration, please email resume to Chrisman LLC’s Anjelica Nixt for forwarding.

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Source: mortgagenewsdaily.com

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Loyalty? Not in the mortgage business. That is, if you actually want to save money on your home loan.

A few years back, an HSBC survey revealed that 52% of U.S. homeowners “switched providers” (sorry, they’re British) when obtaining subsequent mortgages.

This was mainly driven (53%) by the desire to get a better deal, aka a lower mortgage rate with fewer closing costs.

That survey also found that 46% of consumers investigated a mortgage switcheroo, again either to save money or to lock in a new low rate due to rising interest rates.

Other reasons homeowners decided to go with another mortgage company were because they moved and purchased a new property.

Or due to their current mortgage deal was expiring. I think they mean an adjustable-rate mortgage resetting.

Is It Bad to Switch Mortgage Lenders?

mortgage retention

A new report from Black Knight claims that loan servicers retained just 18% of the estimated 2.8 million homeowners who refinanced a mortgage in the fourth quarter of 2020, the lowest share on record.

Interestingly, those who refinanced to improve their rate and/or term were retained at a higher rate (23%) versus those pulling cash out as part of the transaction (11%).

This could be due to cash out refinances being harder to come by lately, and thus offered by fewer lenders. Or it just feeling more complex to the homeowner.

But here’s the biggie – among higher-credit quality rate and term refinances, borrowers who switched mortgage lenders received more than an eighth of a percent lower rate than those who refinanced and remained with their current lender/servicer.

In other words, you might get a lower mortgage rate if you switch mortgage lenders, instead of remaining loyal.

So is it bad to switch mortgage lenders? Not if you want to save money! Of course, your old lender might not feel the same way.

Mortgages Are Mostly a Commodity

  • Home loans aren’t all that different from one another
  • This is why lenders are increasingly coming up with unique ways to sell you one
  • The vast majority are 30-year fixed products whose only difference might be the interest rate or fees involved
  • And the majority just follow the underwriting guidelines of Fannie Mae, Freddie Mac, or HUD

It’s really no surprise that a lot of consumers don’t stay with their original mortgage lenders and/or loan servicers.

Aside from some existing lenders sometimes talking borrowers out of a refinance, the product is mostly the same no matter where you get it.

That makes customer retention difficult, especially when other lenders are aggressively marketing to homeowners.

These days, the majority of home loans are backed by the agency guidelines of Fannie Mae, Freddie Mac, or the government via FHA loans and VA loans. I think it’s something like 90% of mortgages.

This means mortgage loans are pretty homogeneous, despite what channel they’re originated in, or which institution provides the financing.

You could get the same exact home loan from a local credit union, a big bank, an online mortgage banker, or a mortgage broker.

And who really cares where you get your mortgage as long as the company is competent enough to close the thing, and honest in terms of rate and fees?

It’s not like you’re going to walk around and brag about your cool mortgage from X bank after the fact. It’s certainly not a status symbol, or a conspicuous transaction.

I’m pretty sure I’ve never had a conversation about someone’s branded mortgage before.

And I doubt an “influencer” is going to post about theirs on Instagram. Well, I take that back, they might…because someone paid them.

Mortgage Advertising Is Following the Insurance Model

  • Like mortgages, most forms of insurance are similarly boring and unoriginal
  • But that doesn’t stop mega insurers like Geico from advertising to you 24/7
  • Other insurers create catchy new names for run-of-the-mill coverage that isn’t really unique
  • Mortgage lenders are beginning to do that too in a bid to separate themselves from the crowd

This is exactly why insurance companies use celebrity endorsements and smart marketing gimmicks to get you to switch, or conversely, to stick around.

Car insurance isn’t cool or exciting and never will be, nor are mortgages, as much as I want them to be.

Ultimately, we’re all being sold the same thing, it’s just that some companies try to differentiate themselves by slapping clever names onto their products.

For example, Quicken Loan’s Rocket Mortgage is about reinventing the mortgage process, not the mortgage itself.

You’re still probably going to get a 30-year fixed home loan or some other ordinary mortgage that you would get anywhere else.

It’s just the way you get it that might change. Instead of meeting face-to-face with a banker, you might upload documents on your smartphone and authorize the release of documents electronically.

This could make the experience a lot easier and more pleasant, but it doesn’t mean you’re necessarily getting anything different.

Because everyone is basically offering their customers same thing, it comes down to price, customer service, and now perhaps clever marketing.

The one exception is portfolio home loan programs, which are actually unique to the mortgage lender providing them. These are loans kept on the originating bank’s books that contain distinct underwriting guidelines.

We’re starting to see more of them, though most lenders remain fairly cautious with the mortgage crisis still a not-too-distant memory, despite taking place a decade ago.

For example, a lot of the zero down mortgages you see are unique to the companies offering them, the latest one I came across from Ideal Credit Union.

And some of the so-called fintech disruptors like SoFi Mortgage are actually providing unique offerings like a 5/1 ARM with an interest-only option and jumbo loans as high as $3 million with just 10% down.

Be Careful Not to Pay More for the Same Exact Mortgage

  • While it’s important to use a mortgage lender you can trust
  • Such as one that can actually close your home loan competently without major delays
  • It doesn’t really matter what “brand” the mortgage it is after it funds
  • And there’s a good chance it’ll be resold to a different company shortly after closing anyway

Those exceptions aside, many of us have very similar mortgages that are only unique in terms of where they originated from.

As noted, most of today’s mortgages are conforming loans, meaning they meet the guidelines of Fannie and Freddie. Or they’re simply backed by the government via the FHA, VA, or USDA.

And just about all of them are 30-year fixed-rate loans that function exactly the same.

That’s why you have to ask yourself – if the company isn’t offering anything different, why pay more?

Might as well bargain shop and find the best mortgage rate with the lowest closing costs, instead of simply going with a household name because of a funny commercial.

At the end of the day, as long as they get you to the finish line, you’ll probably never think about your mortgage company again. Just make sure they’re reputable first…

Chances are your mortgage will be sold off in a matter of months anyway, so the company you get it from likely won’t even service it.

In fact, your final correspondence might be a notice of your home loan changing hands…

(photo: lamdogjunkie)

Source: thetruthaboutmortgage.com

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Most mortgage lenders offer both home purchase loans and refinances. But Direct Access Funding is all about the refis.

In fact, the Southern California based lender refers to itself as a the “refinance division” of its parent company.

Seeing that most refinances are driven by the desire to obtain a lower mortgage rate, there’s a good chance their pricing is competitive.

They say they’ve got the best refinancing rates period and quality customer service to boot, which their reviews seem to back up.

So if you’re an existing homeowner looking for a better mortgage, they could be worth looking into. Let’s dig into the details.

Direct Access Funding Fast Facts

  • A direct-to-consumer mortgage lender that offers home refinance loans
  • Founded in 1998, headquartered in Irvine, California
  • The refinance division of Absolute Home Mortgage Corporation
  • Licensed to do business in 15 states and the District of Columbia
  • Their parent company funded $2 billion in home loans last year
  • Claim to offer the best mortgage refinance rates

As the name implies, Direct Access Funding is a direct-to-consumer mortgage lender based in Irvine, California, which is in the heart of Orange County.

Instead of a physical branch network, they work remotely with customers from a central call center to help you process and close your loan.

The company is located near many other mortgage lenders, including CashCall Mortgage, ClearPath Lending, loanDepot, and Watermark Home Loans.

As noted, they dabble only in mortgage refinancing, meaning their target market is existing homeowners as opposed to home buyers.

They are actually a division of Absolute Home Mortgage Corporation based out of Fairfield, New Jersey, which originated about $2 billion in home loans last year.

They’re currently licensed to do business in 15 states and the District of Columbia.

Those states include Arizona, California Colorado, Connecticut, Delaware, Florida, Illinois, Maryland, New Jersey, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, and Virginia.

How to Apply with Direct Access Funding

To get started, you can call them on the phone or simply visit their website and begin on your own.

Your best move might be to get in touch with a licensed loan officer first to discuss mortgage rates, lender fees, and overall eligibility.

Once you get the information you need to proceed, you can fill out their digital mortgage application online.

It allows you to complete the form 1003 electronically, eSign disclosures, and upload supporting documents via a secure portal.

Once your loan is submitted, you’ll be able to manage your loan online from start to finish.

It’s unclear if the processing and underwriting of your loan is completed in-house or at their parent company’s headquarters.

Regardless, their goal is to make refinancing stress-free and they employ the latest technology and solutions to make that happen.

Because they focus on existing homeowners only, the process should be faster than traditional banks and lenders.

Loan Programs Offered by Direct Access Funding

  • Rate and term refinances
  • Cash out refinances
  • Streamline refinances
  • No cost refinances
  • Conforming loans backed by Fannie Mae and Freddie Mac
  • FHA loans
  • Fixed-rate mortgages in various loan terms

Direct Access Funding seems to be solely focused on mortgage refinances for existing homeowners.

This includes rate and term refinances, cash out refinances, and streamline refinances.

They can also structure your loan as a no cost refinance through the use of lender credits so nothing needs to be paid out of pocket.

In terms of loan types, I believe they only originate conforming loans backed by Fannie Mae and Freddie Mac, along with FHA loans.

It’s unclear if they offer VA loans or jumbo loans as well.

You can get a fixed-rate mortgage such as a 30-year fixed or a 15-year fixed, and possibly an adjustable-rate mortgage too.

They lend on primary residences, second homes, and investment properties, including condos/townhomes.

All in all, their product menu isn’t vast but should cover most of the population.

Direct Access Funding Mortgage Rates

While they claim to have the “best” mortgage rates for a refinance loan, they don’t list their rates online. At least not on their website.

However, you might find them on third-party websites alongside other lenders in mortgage rate tables.

My assumption is their rates are very competitive since they’re a branchless, refinance-only lender.

And because refis are generally pursued to save money, they will need to beat your existing rate to earn your business.

But do take the time to compare their quote to other lenders to be sure. And also ask about any lender fees, such as a loan origination fee or application fee.

I’d classify them as a low-cost mortgage lender because of their lightweight business model (lack of branches and advertising), which is a good thing if you’re looking for lowest possible rate/fee.

Direct Access Funding Reviews

On Experience.com, Direct Access Funding has an impressive 4.91-star rating out of a possible 5 from over 1,000 customer reviews.

You are able to filter the reviews by loan officer to see how certain individuals have performed in the past. If a certain person stands out, be sure to ask for them when calling in.

Over at Google, they have an even better 4.9-star rating from nearly 200 reviews, which is pretty close to perfection.

Lastly, they’ve got a 4.9 rating on Bankrate from 15 reviews, with 100% of reviewers indicating they’d recommend the company to others.

Their parent company Absolute Home Mortgage Corp. is an accredited company with the Better Business Bureau (since 2013) and currently holds an ‘A+’ rating based on complaint history.

All of these reviews give them some legitimacy, even if they’re not a household name like some of the larger lenders out there.

In closing, Direct Access Funding seems to be a streamlined refinance shop that could be a good fit for an existing homeowner looking for a lower mortgage rate or cash out.

They’re probably best suited for those with plain vanilla loan scenarios (e.g. W-2 employee, conforming loan amount, single-family residence).

If that’s you, they might be able to beat your existing mortgage rate and save you money each month.

But those with more complex loan scenarios (self-employed borrowers, investors, jumbos) may want to look elsewhere.

Direct Access Funding Pros and Cons

The Pros

  • Can apply for a home loan online in minutes without a human
  • Offer a digital mortgage application (paperless process)
  • Say they offer the best refinance rates
  • Excellent reviews from past customers
  • Parent company is accredited, A+ BBB rating

The Cons

  • Not licensed in all states
  • No branch locations
  • Only offer refinancing products (not home purchase loans)
  • No mention of lender fees

Source: thetruthaboutmortgage.com

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Let’s talk mortgage basics: “What is the loan-to-value ratio?”

If you’re currently shopping for a home or already going through the mortgage loan process, chances are you’ve heard the phrase loan-to-value ratio get thrown around on more than one occasion.

You may have also encountered the acronym “LTV” while perusing mortgage advertisements or playing around on mortgage rate comparison websites.

Regardless of what’s going on in the housing market, you should know all about this very important term when applying for a home loan.

Why? Because it can greatly affect mortgage rate pricing, refinance options, and overall loan eligibility.

How to Calculate the Loan-to-Value Ratio (LTV)

loan to value ratio

  • It’s actually one of the easiest calculations you can make
  • Simply divide the loan amount by the appraised value or purchase price
  • And you’ll wind up with a percentage known as your LTV
  • The tricky part might be agreeing on a sales price and getting the home to appraise at value

Simply put, the loan-to-value ratio, or “LTV ratio” as it’s more commonly known in the industry, is the mortgage loan amount divided by the lower of the purchase price or appraised value of the property.

If we’re talking existing mortgages (in the case of refinance loans), it’s the outstanding loan balance divided by the appraised value.

When calculating it, you will wind up with a percentage. That number is your LTV. And the lower the better here folks!

It’s actually very easy to calculate (no algebra required) and takes just one step. You don’t even need a mortgage calculator. In fact, you might be able to run the numbers in your head. Honest!

Let’s calculate a typical LTV ratio:

Property value: $500,000
Loan amount: $350,000
Loan-to-value ratio (LTV): 70%

In the above example, we would divide $350,000 by $500,000 to come up with a loan-to-value ratio of 70%.

Using a basic household calculator, not a so-called “LTV calculator,” simply enter in 350,000, then hit the divide symbol, then enter 500,000. You should see “0.7,” which translates to 70% LTV. That’s it, all done!

This means our hypothetical borrower has a loan for 70 percent of the purchase price or appraised value, with the remaining 30 percent the home equity portion, or actual ownership in the property.

LTV ratios are extremely important when it comes to mortgage rate pricing because they represent how much skin you have in the game, which is a key risk factor used by lenders.

A Lower LTV Ratio Means More Ownership, Better Mortgage Rate

low LTV low rate

  • The lower your loan-to-value ratio the more home equity or down payment you have
  • Which is another way of saying ownership or skin in the game
  • A low LTV equates to a lower mortgage rate because you’re viewed as less risky
  • It means the bank is risking less since you are more invested in the underlying property

Essentially, the lower the loan-to-value ratio, the better, as it means you have more ownership (home equity) in the property.

Someone with more ownership is less likely to fall behind on payments or foreclose, seeing that they have a greater equity stake, aka financial interest to keep paying the mortgage each month.

They’ve also got more options if they do struggle with payments, as they could just sell the property without taking a loss (or the bank losing money).

Not only that, but banks and mortgage lenders also set up pricing adjustment tiers based solely on the LTV ratio.

Those with lower LTV ratios will enjoy the lowest interest rates available, while those with high LTVs will be subject to higher mortgage rates and/or closing costs.

For example, if you’re being “hit” by the lender for having a less-than-stellar credit score, that adjustment will grow larger as the loan-to-value ratio increases (higher LTV ratio = greater risk).

So if your mortgage rate is bumped a quarter percent higher for a loan-to-value ratio of 80%, that same pricing hit may be increased to a half percentage point if the LTV ratio is a higher 90%.

This can certainly raise your interest rate in a hurry, so you’ll want to look at all possible scenarios with regard to down payment and loan amount to keep your LTV ratio as low as possible.

More importantly, just maintain an excellent credit score and you’ll have plenty of loan options, regardless of your chosen down payment or available home equity.

80% LTV Is a Very Important Threshold!

80% LTV

  • Keep your mortgage at/below 80% LTV if you want to save money
  • You won’t have to pay private mortgage insurance (PMI)
  • And it should result in a lower mortgage interest rate with fewer pricing adjustments
  • You’ll also enjoy greater lender choice as most banks will lend up to 80% LTV

Most borrowers (who have the means) elect to put 20% down when buying a home, as it allows them to avoid mortgage insurance and the much higher pricing adjustments often associated with LTVs above 80%.

Fewer adjustments mean you can secure a lower interest rate on your mortgage. And if you can avoid PMI at the same time, it’s a win-win for your monthly housing payment!

You may also find it easier to get approved, as virtually all banks and mortgage lenders will accept LTVs of 80% or less.

But you don’t necessarily need to put 20% down to enjoy the benefits of a low-LTV mortgage.

Also Get to Know the Combined Loan-to-Value Ratio (CLTV)

Looking at the above example again, if you were to raise the first mortgage amount to $400,000 and add a second mortgage of $50,000, the combined loan-to-value ratio, or CLTV as its known, would be 90%.

Banks and mortgage lenders have both LTV and CLTV limits, meaning they won’t allow homeowners to borrow more than say 80, 90, or 100 percent of the property value.

These limits came down after the Great Recession but are creeping back up again…

Let’s do the math here; again, no mortgage calculator required!

Simple math: $400,000 + $50,000 = $450,000 / $500,000 = 90% CLTV

You would have a first mortgage at 80% LTV, and a second mortgage for an additional 10% LTV, making the CLTV 90%. Simply add up both numbers.

Sometimes borrowers elect to break up home loans into a first and second mortgage, known as combo mortgages.

This keeps the loan-to-value ratio below key levels, thereby reducing the interest rate and/or helping the homeowner avoid private mortgage insurance.

Tip: The undrawn portion of a home equity line of credit (HELOC) typically isn’t included in the CLTV calculation.

Max LTV by Home Loan Type

max LTV

  • FHA loans go as high as 96.5% LTV (3.5% down payment)
  • Conforming loans (Fannie/Freddie) go as high as 97% LTV (3% down)
  • USDA and VA loans go to a full 100% LTV (zero down)
  • Jumbos, cash-out refis, and investment properties are much more restrictive
  • And there is no maximum LTV in many cases for streamline refinances

There are certain LTV limits based on home loan type, with conventional loans (non-government) typically being more restrictive than government loans.

And mortgage refinance programs often less accommodating than home purchase loans.

At the moment, you can get an FHA loan as high as 96.5% LTV, which is just 3.5% down payment.

You can get a conventional loan as high as 97% LTV, which at just 3% down is higher than it used to be.

In recent history, the maximum was 95% LTV, but now Fannie Mae and Freddie Mac are competing directly with the FHA.

[See FHA vs. conventional for more on that.]

You can get either a VA loan or USDA loan at 100% LTV (which represents no money down).

These are the most flexible loan programs LTV-wise, but they are also only available to veterans or those living in rural areas, respectively. So not everyone will qualify for these types of mortgage loans.

There are also proprietary home buying programs from various private mortgage lenders that allow for 100% LTV financing if you take the time to shop around.

If it’s a jumbo home loan, a cash-out refinance, or an investment property, the loan-to-value will be a lot more limited, potentially capped at just 70-80% LTV, depending on all the attributes.

And finally, those underwater or upside down borrowers you hear about; they owe more on their mortgage than the property is currently worth.

This can happen due to negative amortization and/or home price depreciation.

A quick underwater loan-to-value ratio example:

Property value: $400,000
Loan amount: $500,000
Loan-to-value ratio (LTV): 125%

As you can see, the underwater borrower has a LTV ratio greater than 100% (this equates to negative equity), which is a major issue from a risk standpoint.

For the record, you get 1.25 by dividing 500 by 400.

The problem with homeowners in these situations is that they have little incentive to stick around, even with a modified mortgage payment, as they’re so far in the red that there’s little hope of recouping home value losses.

However, the popular Home Affordable Refinance Program (HARP) allowed millions of underwater homeowners to refinance to lower rates with no LTV limit. And many of these folks are probably now back in the black.

Today, this type of program still exists, but is a permanent option known as a high-LTV refinance, or HIRO for short.

So there are options to refinance and get a lower interest rate, as long as your loan is owned by Fannie Mae or Freddie Mac, no matter the mortgage balance relative to the property value.

Same goes for FHA loans and VA mortgages thanks to the FHA streamline refinance and the VA IRRRL option.

Despite being far behind new homeowners entering the market in terms of building home equity, many of these formerly-underwater borrowers now have lots of equity thanks to rising home prices and several years of paying down their mortgages.

That’s why you have to consider the long-game in real estate and never give up, even when times get tough. This also illustrates why home buying shouldn’t be a quick or hasty decision.

A Lower Loan-to-Value Can Save You Money!

  • A lower LTV generally results in a better interest rate
  • Which means cheaper monthly mortgage payments
  • It puts more of your hard-earned dollars toward the principal balance each month
  • Potentially saving you thousands of dollars over the life of the loan!

As noted, a lower LTV will likely result in big savings thanks to a lower interest rate.

Additionally, you may be able to avoid costly private mortgage insurance, enjoy expanded loan program eligibility, and have an easier time getting approved for a mortgage.

If your LTV is higher than you’d like it to be, there are some creative options to lower it.

Borrowers Can Reduce Their LTV in a Variety of Ways

  • Come in with a larger down payment if it’s a home purchase loan
  • Ask for gift funds to increase your down payment
  • Or break your mortgage up into two separate loans (combo loan)
  • Make extra payments or a lump sum payment for a refinance to get the LTV down before you apply
  • Or simply wait for natural amortization and home price appreciation to lower your LTV over time

If we’re talking about a home purchase, simply bring in more down payment money and the LTV will be lower. Easier said than done, sure, but possible for some.

Perhaps someone will gift you the money or act as a co-borrower?

Alternatively, you can look into breaking up your financing into two loans, with both a first and second mortgage.

If it’s a mortgage refinance, simply pay down the mortgage balance a bit more before you apply, whether on schedule or by making extra mortgage payments.

This can be especially helpful if you’re super close to a certain LTV threshold, or just above the conforming loan limit.

Speaking of, pay close attention to your LTV – if it’s just above 80% or some other meaningful tier, think about adjusting your loan amount down (your loan officer should advise you here!).

Lastly, there’s another way existing homeowners can get their LTV down and it requires no effort whatsoever.

You don’t have to do anything except sit back and watch your property value increase over time, thereby lowering your LTV in the process. Of course, the opposite can happen too if home values drop!

But as noted, real estate should be treated with a long time horizon, so be sure you have the ability to ride the ups and downs and make moves when it’s most favorable to you.

Read more: 10 ways to build home equity.

Source: thetruthaboutmortgage.com

Apache is functioning normally

Today we’ll explore one of the nation’s largest loan servicers that happens to be a major mortgage lender as well, “Lakeview Loan Servicing.”

As their name implies, they service mortgage loans, meaning they collect monthly payments from customers after the loan funds.

These days, a lot of mortgage lenders don’t do that, and instead focus on making new loans and selling them off quickly so they can fund even more.

But Lakeview has adopted a strategy some of the largest mortgage lenders in the country have, doing both.

This means aside from servicing loans, they also originate billions in mortgages annually. Let’s see if they could be a good fit for a new mortgage.

Lakeview Loan Servicing Fast Facts

  • Direct-to-consumer mortgage lender that offers home purchase and refinance loans
  • Founded in 2010, headquartered in Coral Gables, Florida
  • Funded $41 billion in home loans last year (a top-25 mortgage lender nationally)
  • The 4th largest loan servicer in the country
  • Licensed to lend in 48 states and the District of Columbia
  • Also operates a wholesale and correspondent lending business

As noted, Lakeview Loan Servicing operates as both a loan servicer and a direct-to-consumer mortgage lender. This is similar to a NewRez or a Rocket Mortgage.

They are currently the nation’s fourth largest loan servicer in the country, and help more than 1.4 million customers manage their home loans annually.

The company also recently became the largest servicer of Ginnie Mae mortgages, aka FHA loans and VA loans.

To clarify, they own the servicing rights to all these mortgages, and actually partner with subservicers like LoanCare to process payments, manage escrow, etc.

At the same time, they mustered an impressive $40.7 billion in home loan origination last year, landing them in the top-25 lender list.

They did a near-equal amount of home purchase loans and mortgage refinances, so they could be a worthwhile choice for both a new home buyer or an existing homeowner.

My guess is they tap into their massive loan servicing portfolio to find new refinance candidates. So if they service your loan, they may have reached out.

As I always say, when a lender reaches out, reach out to other lenders! That way you can comparison shop.

At the moment, they are licensed in 48 states and D.C., with Hawaii and New York the exceptions.

How to Apply for a Mortgage with Lakeview Loan Servicing

If you’re a current loan servicing customer, you may have received solicitations from Lakeview Loan Servicing to refinance your loan.

But they’re also a big originator of home purchase loans, so home buyers with no prior relationship could also choose them as their lender.

They say they’ve got more than 100 loan officers in four locations across the country to serve home buyers and refinancers.

And both loan processing and underwriting are done in-house to ensure fast turn times. Those who need to get pre-approved for a mortgage can do so in as little as 24 hours.

To get started, you can visit their website or call them directly. If you go online, you can create an account and submit a new mortgage request.

At that point, a licensed loan officer will get in touch to discuss loan pricing and eligibility.

They offer a digital mortgage application powered by ICE Mortgage Technology that allows you to complete most tasks electronically.

And once your loan is submitted, you’ll be able to manage it and check status via the online borrower portal.

Once the loan funds, it’ll be serviced by them as well via one of their subservicing partners.

Lakeview Home Rewards

One perk to using them for a home purchase loan is the “Lakeview Home Rewards” program.

In short, it’s a real estate agent referral program and mortgage lender all rolled into one.

Once you sign up, you’ll be matched with a top local real estate agent and a dedicated mortgage loan officer from Lakeview.

After your loan funds, you’ll receive up to $6,500 cash back, depending on the home’s purchase price.

Those who sell and buy a home using the service can receive up to $13,000 in rebates once both transactions close.

Note that these rewards aren’t offered in some states (AK, IA, LA, and MO) and are limited in others.

They say they only work with “premier brokerages across the United States,” and pick the top real estate agents from those companies.

This includes real estate agents with at least five years of experience who maintain a 90%+ satisfaction rating.

If you aren’t already working with an agent, this program could be a money-saver and provide the convenience of an end-to-end home buying process.

Loan Programs Offered by Lakeview Loan Servicing

  • Home purchase loans
  • Refinance loans: rate and term, cash out, streamline
  • Conforming loans backed by Fannie Mae and Freddie Mac
  • Jumbo loans
  • FHA loans
  • VA loans
  • USDA loans
  • Home equity loans

Lakeview Loan Servicing offers home purchase loans and mortgage refinance loans, meaning they serve both existing homeowners and prospective home buyers.

If you already own a home, you can refinance to obtain a lower mortgage rate and/or get cash out. Streamline options are offered as well.

All the major loan types are available, including conforming loans backed by Fannie Mae and Freddie Mac, and government-backed loans like FHA, VA, and USDA loans.

It’s also possible to get a jumbo home loan, and even a second mortgage in the way of a home equity loan.

They seem to offer mostly fixed-rate mortgages, including the 30-year fixed, 15-year fixed, and other less common loan terms.

I’m not sure if they also originate adjustable-rate mortgages, which aren’t very popular at the moment.

But they should have enough options to suit most home buyers and homeowners out there.

Lakeview Loan Servicing Rates

They say they offer low interest rates, but that’s about it. You won’t find their daily mortgage rates listed online to compare to other lenders.

As such, you’ll need to call them up and get in touch with a loan officer to obtain the latest pricing.

Be sure to inquire about lender fees when you do that to get the full picture. It’s unclear if they charge a loan origination fee or other fees for processing, underwriting, and so on.

My guess is they’re a middle-of-the-road lender in terms of pricing, though that’s just an assumption.

At the end of the day, they might be priced lower than the big banks and national brands, but perhaps higher than the low-cost mortgage lenders out there.

But you won’t know until you call and speak to a human.

Lakeview Loan Servicing Reviews

On Zillow, they have a 4.84-star rating out of 5 from about 400 reviews. A decent number of recent reviews indicated the interest rate was lower than expected.

Their Zillow rating might be the best representation of their home lending division, while other reviews you come across could be more related to their servicing business.

For example, over at Google it’s more of a mixed bag, with a much lower 2.5-star rating from over 600 reviews. The caveat is this may include both lender customers and servicing customers.

This is one of the problems with operating as both types of companies under the same brand. Take the time to read the reviews to see if they relate to new loans or existing, serviced loans.

While they aren’t accredited with the Better Business Bureau (BBB), they do have an ‘A+’ rating based on complaint history.

In summary, Lakeview Loan Servicing could be a good choice for a home purchase loan due to their rebate program, and potentially good for refinancers if the rates are low.

The only question marks are pricing and customer service, the latter of which might be muddled because they are also a loan servicer.

Lakeview Loan Servicing Pros and Cons

The Pros

  • Can apply for a home loan online in minutes
  • Digital mortgage application powered by ICE Mortgage Technology
  • Lots of home loan programs to choose from including second mortgages
  • Lakeview Home Rewards offers up to $6,500 cash back
  • A+ BBB rating
  • They’ll service your loan after closing
  • Free mortgage calculator and mortgage glossary online

The Cons

  • Not licensed in Hawaii or New York
  • No physical branches
  • Do not publicize mortgage rates or lender fees
  • Lots of mixed reviews (which may be due to servicing)

Source: thetruthaboutmortgage.com

Apache is functioning normally

It’s the first of the month, and with that comes fear and uncertainty that both homeowners and renters won’t be able to make payments due to loss of income related to the coronavirus.

While it’s not clear how bad things will get just yet, CNBC interviewed FHFA director Mark Calabria to get some preliminary numbers, which he himself called “very rough” and subject to change quickly.

Two Million Missed Mortgage Payments by May

  • 300,000 missed payments for Fannie/Freddie owned loans in April
  • 700,000 missed payments for overall market in April
  • Jumps up to 1M and 2M respectively by May
  • Expected to be worse for government loans backed by FHA/VA

He currently estimates that roughly 300,000 home loans backed by Fannie Mae and Freddie Mac could go delinquent in April, which is just over 1% of their book.

For the overall mortgage market, he said that translates to roughly 700,000 delinquent home loans.

By May, those numbers jump up to one million and a little more than two million missed payments, respectively.

He sees more stress in FHA/VA loans due to their lower credit score requirements, higher DTI ratios, and so on.

While it sounds pretty dire, Calabria was quick to point out that it only represents somewhere between 3-5% of the market, and that he’s “not seeing worst-case scenarios.”

This is counter to a comment made by MBA chief economist Mike Franantoni, who warned that if a quarter of U.S. homeowners (~12.5 million households) sought six months of mortgage forbearance, loan servicers could owe between $75 and $100 billion to investors.

Meanwhile, Mark Zandi, chief economist for Moody’s Analytics, said up to 15 million Americans could default if the lockdown goes through summer.

That would likely crush many loan servicers who lack the liquidity to face a barrage of missed payments, but the hope is it doesn’t come to that. Or the Fed steps in to help.

Calabria noted that if borrowers only miss 2-3 months of payments, most loan servicers should be OK, but if it goes beyond that time frame, a lot of firms will face liquidity problems.

Top retail mortgage lender Quicken Loans also services about 1.8 million home loans, and CEO Jay Farner said the company’s balance sheet is “strong enough” to pay holders of bonds backed by its mortgages in the event many default.

However, most forbearance requests have apparently come from homeowners who’ve never been late, which he says as a good sign they’ll get back on track once normal employment resumes.

Additionally, he pointed out that 70-80% of calls were from homeowners not yet facing hardship, who apparently just wanted to know their options.

He did reiterate that, “If you can pay your mortgage, please do so.”

The CARES Act Allows Borrowers to Miss 6-12 Mortgage Payments

  • Homeowners with a federally-backed mortgage can request forbearance for 180 days (and an additional 180 days)
  • Applies to FHA/VA/USDA and Fannie Mae/Freddie Mac loans
  • Simply requires borrowers to request assistance from their loan servicer and say they are facing a hardship related to COVID-19
  • Lenders may not charge fees, penalties, or interest beyond what would have been due had borrower remained current

The passage of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) allows homeowners with a federally-backed residential mortgage to request forbearance for up to 180 days, or six months.

This includes FHA loans, USDA loans, VA loans, and home loans purchased or securitized by Fannie Mae or Freddie Mac.

That’s most of the mortgage market, aside from jumbo loans and portfolio loans kept on banks’ books.

It also grants them the ability to request an additional 180 days of forbearance if needed, or to cancel it at any time.

During the forbearance period, lenders may not charge fees, penalties, or interest beyond what would have been due had the borrower made all contractual payments on time and in full.

It’s still unclear what happens after the forbearance period ends. Does the loan servicer assess the borrower’s ability to get current or simply add the missed mortgage payments to the end of the loan term? Who knows.

Update: You can now get up to 15 months of mortgage forbearance.

Can Anyone Get Mortgage Forbearance Under CARES Act?

  • The CARES Act doesn’t define what a “financial hardship” is
  • Nor are loan servicers allowed to require additional documentation to grant mortgage forbearance
  • Both Calabria and Treasury Secretary Steven Mnuchin have urged homeowners to pay their mortgages if they can
  • But at the moment it appears anyone can qualify without proof of hardship

All a homeowner has to do to get mortgage forbearance is submit a request to their loan servicer that they are “experiencing a financial hardship due, directly or indirectly, to the COVID-19 national emergency,” regardless of delinquency status.

Other than that attestation from the homeowner, a loan servicer may not require additional documentation to grant mortgage payment forbearance.

This means you don’t have to prove loss of income or unemployment to qualify, something Calabria acknowledged while saying “we’re operating on the honor system.”

In other words, it should be very easy to get six to 12 months of mortgage payments put on hold with little more than a request, without the typical hoops to jump through.

While great for homeowners in need, it could be a disaster for loan servicers and the mortgage industry in general, assuming millions take part in the relief effort.

Read more: What’s the Last Day to Apply for Mortgage Forbearance Under the CARES Act?

Source: thetruthaboutmortgage.com

Apache is functioning normally

Today we’ll check out a Southern California-based mortgage broker named “Lendevity,” which has been earning rave reviews lately.

Their name is actually a combination of lend and longevity, their way of saying they’ll be by your side throughout the loan process and beyond.

The company says it takes an “advisory approach” to better understand your financing needs and create a custom solution that fits your goals.

They do so using the latest technology, charge $0 lender fees, and aim to close loans in three weeks or less.

And they’ve got a loyalty program to boot if you come back to them a second time. Let’s learn more.

Lendevity Fast Facts

  • Online mortgage broker that offers home purchase and refinance loans
  • Founded in 2018, headquartered in Woodland Hills, CA
  • Licensed to do business in five states (AZ, CA, CO, OR, WA)
  • Charge $0 lender fees on most loans
  • Offer a loyalty program for repeat customers that waives 3rd party fees

As noted, Lendevity is a mortgage broker, meaning they connect consumers with their wholesale lender partners.

This gives them the ability to shop your loan so you don’t have to in order to find the best price.

They may also have access to unique loan programs the bigger banks might not offer.

The company is located in Woodland Hills, California and was founded in 2018. Despite being rather young, they’ve got consistently excellent reviews.

At the moment, they are licensed to do business in just five states, including Arizona, California, Colorado, Oregon, and Washington.

One benefit to using them is their lack of lender fees, along with a loyalty program if you come back a second or a third time.

How to Apply for a Mortgage with Lendevity

To begin, you can call them up, visit their office, or simply cruise over to the website and apply.

Since they like to take a hands-on approach, your best move might be speaking to a rep first to discuss your loan scenario.

From there they can determine eligibility and loan pricing, then you can apply via their website.

Their digital home loan application, which allows you to complete most tasks electronically, is powered by ICE Mortgage Technology.

You can fill out the app from any device, upload necessary documents, eSign disclosures, and track loan progress from start to finish.

They aim to close their loans in three weeks or less, which is also a plus if you’re in a hurry or simply don’t want the process to be dragged out.

What’s nice about mortgage brokers these days is they offer the same technology that the big fintech companies have, like Rocket Mortgage or Better Mortgage.

So you can get the best of both worlds when using a local broker. And those who need a little more attention get a loan guide throughout as well.

Loan Programs Offered by Lendevity

  • Home purchase loans
  • Refinance loans
  • Conforming loans backed by Fannie Mae and Freddie Mac
  • FHA loans
  • VA loans
  • Jumbo loans
  • Bank statement loans
  • Band-Aid loans

One of the benefits of a being a mortgage broker is the ability to offer home loan programs from a variety of different companies.

This allows Lendevity to extend a complete lending menu to its customers, even if they’ve had issues obtaining financing elsewhere.

Lendevity has options for new home buyers (home purchase loans) and existing homeowners (refinance loans), including cash out solutions.

They’ve got all the usual stuff like conforming loans backed by Fannie Mae and Freddie Mac, FHA loans, and VA loans.

The only major program they don’t seem to offer is USDA loans, which are reserved for rural home buyers.

They even offer jumbo loans with loan amounts up to $10 million. So even if you’re buying or refinancing an absolute mansion, they should offer a solution.

Those who’ve had trouble qualifying for a home loan in the past can take advantage of their so-called Band-Aid Loan, which pays off debts to improve credit scores and DTI ratios.

Then they can get you more permanent financing six months or so later.

If you’re a self-employed borrower, Lendevity also offers bank statement loans that don’t require tax returns to qualify.

Both fixed-rate and adjustable-rate mortgages are available in a variety of different loan terms to suit different needs.

Lendevity Mortgage Rates and Fees

While Lendevity doesn’t post their mortgage rates on their website, they do claim to utilize a transparent pricing model.

This means showing you a variety of mortgage rate and fee options that you can choose from depending on your needs.

For example, you may want to pay discount points for an even lower mortgage rate. Or you could be satisfied with a slightly higher rate in exchange for no fees whatsoever.

Lendevity says they don’t charge lender fees. And claims you won’t be charged an origination fee unless the circumstances of your loan program require it.

Not exactly sure what that means, but it sounds like they don’t charge fees in the vast majority of cases.

And either way, will probably structure your loan as a no cost mortgage, meaning nothing is paid out-of-pocket.

Anecdotally, I’ve seen their rates advertised on third-party websites like Zillow and they were among the lowest listed.

So my guess is they’re pretty competitive with other online, low-cost lenders out there, which may be cheaper than big banks and other household names.

If they can help you snag a low mortgage rate at the same time, it’s a win-win. No costs and a low monthly payment for as long as you keep your loan.

Speaking of, they have a loyalty program for existing customers who refinance a mortgage. In short, they’ll waive all third-party fees, such as title insurance and escrow.

That might give them another leg up on the competition if they’re already matching the lowest rate you find elsewhere.

Lendevity Mortgage Reviews

On Zillow, Lendevity has a perfect 5-star rating from 55 reviews. Nearly all of them indicated that either the interest rate or closing costs were lower than expected, or both in some cases.

They’ve also got a perfect 5-star rating on Yelp from 45 reviews and a similarly solid 4.9-star rating out of 5 on Google from nearly 120 reviews.

It’s the same story on the Better Business bureau (BBB) website, a perfect 5/5 from 28 customer reviews.

Lendevity is also an accredited business with an ‘A+ rating at the moment.

All in all, they appear to be very well-liked by their customers, despite not having hundreds or thousands of reviews. Hopefully it’s a sign of more good things to come.

To sum things up, Lendevity seems to be big on customer service like many mortgage brokers are.

They could be a good fit for a first-time home buyer who needs some additional hand-holding, or someone with a more complex loan scenario that a big bank might fumble.

If their mortgage rates are also low, they could be a good pick for just about any home buyer or existing owner looking to refinance.

Lendevity Pros and Cons

The Good

  • Can apply for a mortgage online in minutes
  • Offer a digital mortgage process
  • Do not charge lender fees
  • Loyalty program that waives third-party fees for return customers
  • Lots of loan programs to choose from
  • 3-week average closing time
  • Excellent reviews from past customers

The Maybe Not

  • Only licensed in five states currently
  • Do not offer USDA loans

Source: thetruthaboutmortgage.com

Apache is functioning normally

Everyone wants to be the next big thing in the mortgage industry, promising a digital experience or even a funded loan in days as opposed to weeks.

We’ve seen signs of this disruption for years now, and while it has improved the customer experience somewhat and shortened turn times, things aren’t much different.

You still have to fill out a loan application, often with the assistance of a human, submit financial documents, and wait for weeks (or over a month) to get your loan funded.

The difference now is you can do some of these tasks remotely, or better yet, authorize your financial accounts to be plugged into the application so you don’t need to track down documents yourself.

But there’s still the usual frustration and timelines that have long plagued the mortgage industry.

While most disruptors have focused on speed and convenience, an emerging company called “LoanSnap” is focused on originating “smart loans” as opposed to “dumb loans” that cost consumers billions annually.

What Is LoanSnap?

LoanSnap

  • A direct mortgage lender and tech company based in Costa Mesa, CA
  • It was formed after acquiring Irvine, CA-based DLJ Financial
  • Currently licensed to do business in 19 states including AZ, CA, CO, FL, IL, and TN
  • Relies on artificial intelligence (AI) to offer a so-called smart home loan to consumers

LoanSnap was formed after acquiring DLJ Financial, a mortgage lender that had been based in Irvine, California for some 21 years.

The company’s current location is in nearby Costa Mesa, CA, with corporate headquarters in tech-rich San Francisco.

It makes sense that they have locations in both cities, as the Bay Area is where startups are born and Orange County has long been mortgage-central.

They offer a so-called “smart loan” that factors in all your monthly bills, such as credit cards and student loans, to ensure you get the best home loan.

In LoanSnap’s own words, it’s a mortgage that relies upon artificial intelligence (AI) “to analyze a consumer’s financial situation instantly and recommend the best options for their unique needs — all while addressing common financial issues like too much debt.”

Put another way, it goes beyond just the lowest mortgage rate or the fastest turn times and considers a customer’s entire financial situation.

After all, the borrower’s home and accompanying mortgage can often serve as their nest egg, dictating other investments and financial decisions.

It can also be leveraged to pay off other high-interest debt, which is where LoanSnap figures in.

At the start of the loan application on their website, they say, “Welcome! Let’s start by identifying where you’re losing money so we can help you own your financial future.”

What they mean by that is you’re probably paying more interest on your credit cards, student loans, and car loans than you are/would be with a low-rate mortgage.

After all, mortgage rates are close to 3%, while credit cards are often 20%+ and auto loans and student loans are maybe 5%+.

They add that most folks “don’t realize they can move their credit cards or loans to their mortgage and save thousands in interest payments.”

So instead of pitching the lowest interest rates, they give you a full view of all your accounts to help their customers avoid losing money.

What Types of Mortgages Does LoanSnap Offer?

savings

  • Home purchase loans, mortgage refinances, and HELOCs
  • The cash out refinance appears to be their chief offering
  • You can get a conventional loan, non-conforming loan, FHA loan, or a VA loan
  • Available on single-family homes and condos/townhomes

At the moment, they offer home purchase loans, mortgage refinances, and HELOCs.

That includes both rate and term refinances and cash out refinances, the latter of which is utilized to pay off other high-interest bills you may have.

The cash out refinance seems to be their weapon of choice to eliminate other debt, and explains the how and why of analyzing a consumer’s complete financial situation.

Once they know about your other debts, they can instantly recommend the best loan options that consider interest rates on all your outstanding debt, thereby saving you money.

In a sense, it’s marketing the cash out refinance as something unique to the company, while just about every mortgage lenders offers them.

Of course, things are a little less liquid in that department at the moment due to COVID-19, but that will likely change over time as the situation normalize.

It also means larger loan amounts for LoanSnap, which equates to more money for them.

In terms of loan type, they offer FHA loans, VA loans, and non-conforming loans. I assume they offer conforming loans backed by Fannie Mae and Freddie Mac as well.

They also offer second mortgages in the form of a home equity line of credit (HELOC), which can be used to pay off other bills like student loans, auto loans, and credit cards.

You can get a home loan on a single-family residence or a condo/townhouse. It’s unclear if they lend on second homes and investment properties.

In terms of where they’re available, they lend in 19 states with plans to expand to more soon.

At the moment, they’re licensed in Arizona, California, Colorado, Florida, Georgia, Illinois, Iowa, Kansas, Michigan, Nebraska, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Washington, and Wisconsin.

LoanSnap Mortgage Rates

While LoanSnap says it looks beyond mortgage rates to help its customers save money, essentially by saving them on other, higher-cost loans, it doesn’t reveal its rates.

Obviously it’d be nice to get an idea of where they stand pricing-wise, but there’s no daily rate section on their website as of now.

So if you want to pricing, you’ll need to either apply or give them a call. My recommendation is to get pricing first before spending time on an application.

Note that cash out refinance rates are often higher than purchase rates, so if you’re comparing rates among lenders, be sure it’s apples-to-apples.

Also take a look at their customer reviews to see what other customers thought about their interest rates and fees for more clues.

With regard to lender fees, they also leave us in the dark, so be sure to inquire about fees and rates when you call and speak with a loan officer.

LoanSnap Reviews

Despite being a relatively young company, they’ve already amassed a decent number of customer reviews.

On LendingTree, they’ve got a 4.6-star rating out of 5 from nearly 300 reviews, with a 92% recommended score.

At Trustpilot, they have a 3.8-star rating, which the site considers “great,” but not quite excellent.

Over at Google, it’s a similar 4.1-star rating, which is certainly good but not the highest customer satisfaction tier.

On Zillow, they have just a dozen or so reviews and a 4.27-star rating.

While they’ve been accredited with the Better Business Bureau since 2009, they aren’t currently rated.

LoanSnap Received an Investment from The Chainsmokers

  • Company has raised millions of dollars via several funding rounds
  • Latest investment comes from fund backed by pop group The Chainsmokers
  • Also supported by True Ventures, group behind Peloton and Fitbit
  • Expect them to become a household name in the mortgage world with that backing

In a bid to perhaps become the coolest mortgage lender out there, aside from maybe Rocket Mortgage, they announced a new investment round that included pop duo The Chainsmokers.

The popular group that makes electronic music is apparently also interested in making money, as evidenced by their early stage technology investment firm known as MANTIS.

In mid-May, LoanSnap raised an additional $10 million, co-led by True Ventures and MANTIS.

To show just how serious they are, True Ventures is the Silicon Valley-based venture capital firm behind Peloton, Blue Bottle coffee, and Fitbit.

Their backers also include Richard Branson and Joe Montana’s Liquid 2 Ventures, so it appears they came to play.

Expect to hear the name LoanSnap if and when searching for a mortgage in the near future.

(photo: Jason White)

Source: thetruthaboutmortgage.com

Apache is functioning normally

If you’re looking for a home purchase lending expert in the Midwest, you may want to check out “Flat Branch Home Loans.”

The Columbia, MO-based company is the #1 home purchase lender in the state, beating out the very biggest names in the industry.

They’re also the top USDA lender in the states of Missouri, Kansas, and Illinois, as well the eighth largest nationwide.

That’s pretty impressive, and could be directly related to their 1,000+ years of combined mortgage experience.

So if you’re a prospective home buyer looking for a little extra guidance, they could be a good fit.

Flat Branch Home Loans Fast Facts

  • Employee-owned, direct-to-consumer mortgage lender
  • Offers home purchase loans and mortgage refinances
  • Founded in 2005, headquartered in Columbia, MO
  • Funded about $3.75 billion in home loans last year
  • #1 retail home purchase lender in the state of Missouri
  • Roughly two-thirds of overall business comes from home state
  • Also very active in Illinois, Kansas, and Oklahoma
  • Currently licensed in 30 states nationwide

Flat Branch Home Loans is an employee-owned, direct-to-consumer retail mortgage lender located in Columbia, Missouri.

They were founded by current president Jim Yankee in 2005, and have since grown to a 700-employee strong company.

Their claim to fame is being #1 home purchase lender in the state of Missouri, as well as a big-time USDA loan lender.

This makes it obvious that they’re a solid choice for home buyers, though they also do a good deal of mortgage refinancing as well.

Last year, they funded about $3.75 billion in home loans, with a 70/30 split of purchase loans and refinances.

Roughly two-thirds of their overall production comes from their home state of Missouri.

And they’re the fourth largest mortgage lender in Missouri overall, only bettered by U.S. Bank, Rocket Mortgage, and Wells Fargo.

Aside from Missouri, they’re quite active in the states of Illinois, Kansas, and Oklahoma.

At the moment, they’re licensed in 30 states, including Alabama, Arkansas, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia, and Wisconsin.

For the record, their name is derived from the Flat Branch stream that flows near Columbia, MO.

How to Apply with Flat Branch Home Loans

To get started, you can visit a local office if located in the Midwest, or simply navigate to their website.

At last count, they’ve got about 58 physical locations in a handful of Midwestern states.

If you begin at the website, you can browse their online loan officer directory, read bios, and find someone to work with.

Once you narrow down your loan officer search, you can click on “Apply” and you’ll have the option to continue on to the digital application or have them reach out to you.

It might be wise to have them reach out first so you can discuss loan pricing and eligibility before filling out the app.

When it comes time to complete the app, their digital mortgage experience is powered by SimpleNexus.

You can fill out the app from a computer, or download their smartphone app and tackle it that way.

Applicants can eSign disclosures, quickly calculate payments, securely scan and upload documents, and message their loan officer with questions along the way.

You’ll also receive updates as you go to determine where you’re at in the process. And receive a notification whenever they request a new document from you.

Simply put, Flat Branch Home Loans offers a good combination of the latest technology and human touch.

Loan Programs Offered by Flat Branch Home Loans

  • Home purchase loans
  • Refinance loans: rate and term, cash out, streamline
  • FHA loans
  • USDA loans
  • VA loans
  • HomeReady and Home Possible (3% down)
  • Grants and down payment assistance programs
  • MHDC loans
  • Section 184 Indian Home Loan Guarantee program

Flat Branch Home Loans is big on home purchase financing, and has a long list of programs to help secure a mortgage.

If you’re an EMT, firefighter, police officer, teacher, or military, their “Community Champions Program” comes with up to $900 in lender credits and a waived appraisal fee.

They also originate Missouri Housing Development Commission (MHDC) loans, which feature down payment assistance via a forgivable second mortgage.

As noted, they’re a major USDA loan lender, so if you’re purchasing a rural home they should be a great fit.

The USDA program has its quirks, so using an experienced lender who knows how to navigate it is advised.

Aside from that, they offer all the major stuff like conforming loans, FHA loans, VA loans, and even bridge loans to help you buy before you sell.

Their Lock and Shop option, which allows you to lock a mortgage rate before you find a home, is available in the states of Arkansas, Illinois, Iowa Kansas, Missouri, Oklahoma, Texas, and Nebraska.

Lastly, they offer the Section 184 Indian Home Loan Guarantee program, a low-down payment loan option for Native Americans.

It’s unclear if they offer jumbo loans or adjustable-rate mortgages, though you can get a fixed-rate mortgage in a variety of different loan terms.

Flat Branch Home Loans Rates

While we know they specialize in home purchase lending, we don’t know a lot about their loan pricing.

To my knowledge, they don’t feature their mortgage rates or lender fees on their website. As such, you’ll need to speak with a human to get a quote.

This doesn’t say anything about their rates, good or bad, it just doesn’t give us anything to go on in this review.

Once you get a mortgage rate quote, be sure to shop their mortgage APR with other banks, lenders, and mortgage brokers to see where they stand.

Take note of any lender fees and/or discount points required for the quoted rate to ensure you’re doing an apples-to-apples comparison.

The only hint we have about pricing comes from their Zillow reviews, in which a good chunk of customers indicated a lower rate and/or closing costs than expected.

Flat Branch Home Loans Reviews

Over at Zillow, Flat Branch Home Loans has a stellar 4.96-star rating out of a possible five from about 900 customer reviews.

Many of the reviews highlight their hands-on service and fast closings, especially important to home buyers.

They’ve also got a 4.9-star rating from about 160 Google reviews, along with a 4.7-star rating on Facebook from roughly 200 reviews, and a 4.9 rating on LendingTree from 40 reviews.

While they aren’t an accredited business, they do hold an ‘A+’ rating with the Better Business Bureau based on customer complaint history.

To wrap things up, Flat Branch Home Loans is clearly a home purchase lender first and foremost.

They pride themselves on their extensive mortgage knowledge and experience, important attributes when it comes to home buying.

Ultimately, if you want a competent lender who you can rely on to close on time, they might be a solid choice.

Their wide array of loan programs, including proprietary offerings and low or zero down options, is also a big plus.

Just pay attention to pricing as well to ensure you receive quality service and a competitive rate.

Flat Branch Home Loans Pros and Cons

The Pros

  • Can apply for a home loan online or via smartphone
  • Offer a mostly paperless, digital mortgage experience
  • Physical branches in many Midwestern states
  • A good range of loan programs to choose from (especially for home buyers)
  • Excellent customer reviews across ratings websites
  • A+ BBB rating
  • Free smartphone app
  • Free mortgage calculator and home buyer guides online
  • They service their loans after closing

The Cons

  • Do not list their mortgage rates or lender fees online
  • Not licensed in all states

(photo: Ivan)

Source: thetruthaboutmortgage.com