Q&A with a Mortgage Professional

Today we put together a list of questions that we frequently receive regarding mortgages, refinances, credit requirements and other related inquiries that pertain to the home mortgage industry. Today, we’re lucky to have Jeff Chin, owner of a boutique brokerage, Independent Mortgage, to answer your questions.

1. What is your background, your mortgage experience, and your current position?

I’m a recovering engineer turned Mortgage Advisor. I started originating loans in 2002, quickly found a liking to it as a profession and with my business partner, we founded Independent Mortgage, LLC in 2004. As a principal, I still originate residential and commercial mortgages. In my spare time, I hold credit management workshops for people to help them understand how scores are formulated and how to improve on them.

2. There is a lot of talk of loan modifications, new programs, new loan limits, and overall change in the mortgage environment. What do you see as the biggest difference in the mortgage environment in the past few years?

The days of liberal lending has definitely left us. Today the climate is one of tremendous suspicion. Lending guidelines are consistently tightened, where a borrower’s profile is under tremendous scrutiny. A borrower’s income, assets, and credit score are checked numerous times. Property values, in a similar fashion, are reviewed in multiple passes to assure that ambiguous issues are not gleaned over. The common sense factor has really disappeared. In our office, we can only shake our head in frustration and try to help our borrowers understand.

3. What do you recommend for borrowers looking to take advantage of these low rates?

The climate remains incredibly favorable for borrowers. Although we (Mortgage Originators) are very busy, looking into a refinance is well worth that 5 or 10 minutes to initiate the process. All things considered for mortgage refinancing currently, a borrower should check his/her credit score to see if it sufficient to get qualify. Currently a 620 credit score is the bare minimum to “talk turkey”. With so many programs, it would be to a borrower’s advantage to select a good mortgage professional to work with. Program guidelines are rapidly changing, so a borrower should “stick with it” until refinancing will not become beneficial.

4. I’m looking to buy a home and I’ve heard about several new programs that are out there. What experience do you have with them, and where should I start?

Today, there’s a lot excitement with the $8,000 tax credit that can be used as a downpayment. I would advise a homebuyer to seek out a knowledgeable Realtor and Mortgage Advisor in tandem. A borrower should know what loan amount they are qualified for, but, just as important, the type of property that are within their qualifications. Unfortunately, Condominiums are on the “highly suspicious” list, so there are lots of prohibitive lending issues in their purchase. Multi-families are also assessed with risk adjustments.

5. My lender has changed several times, and I’m not sure who I should speak to about a loan refinance. What are my options?

You can try to continuously contact the servicer or contact a mortgage broker. Both options are valid and sound, but a broker’s responsibility to place a borrower with the best program that multiple lenders have to offer.

6. What advice do you have for someone that has fallen behind on their payments? What’s the best course of action for them?

Falling behind does not mean they are shut out of getting help. The best option is to contact their servicer to explore their options. If the circumstances are that their income isn’t adequate to continue with their program, then they should have a solid hardship case. Explore the support groups that are available for mortgage distress. Otherwise, a good Mortgage Advisor should be able to offer some guidance.

7. How important is credit score in qualifying for a loan?

It is monumental… I am seeing the minimum score for programs continue to creep up.

8. What is the minimum credit score, or other requirements to get the best rates in today’s market? What’s the minimum score needed to qualify for a loan?

A score over 740 gives a borrower the most leverage, little or no adjustments on rate. Anything between 740 and 620 means that there will be considerations to rate. As of this writing, there are no mainstream programs for people with credit scores under 620. There are some FHA programs that exist for borrowers with scores as low as 580, but in practice, they require much stricter underwriting conditions as well as numerous letters of explanations. I have not been very successful in getting these loans approved, and from what my other collogues have told me, no one has. It is another case of the government promising false hope.

Hopefully you have found these question and answer session helpful for those looking to take advantage of these low rates to purchase or new home, or refinance to help lower and stabilize monthly costs. Keep the questions coming and we’ll continue to post answers to popular questions.

If you would like to contact Jeff directly about your specific mortgage situation, please visit his blog.