After all this time, and all that we went through, it seems that all these big lenders care about is pushing product without any concern for the consumer borrower. Yes many consumers are sophisticated, but even those that are can be persuaded to take mortgage products that just aren't good for them. I have over 20 types of mortgage products and show you the positives and negatives of each one. The problem is, many mortgage loan officers seem to just "accentuate the positive!" I received and email today from one of my wholesale lenders and this is an excerpt:

"Did you know?

Choosing a 5/1 ARM instead of a 30 year fixed rate mortgage could enhance buyer affordability by about 15%.*  This is due to the ARM having a lower interest rate and lower payment versus a 30 year fixed rate mortgage during the initial fixed rate period (5 years).  

As interest rates trend upward, the ARM share of purchase mortgage applications increases as more buyers opt for the lower rate and payment of an ARM."

Now, while I understand that they mean to help us sell mortgages, zoom down on the sentence of affordability by about 15%*. What this means is that the borrower can qualify for more mortgage, more debt, right now, but where does it say make sure you take into consideration the probability of future earnings. Take a look at the next paragraph and the sentence purchase mortgage applications increases. If interest rates are moving up, why should a borrower take an arm? Why should we let them bet that rates will be the same or lower in 5 years? What if rates really moved up in 3, 5, or 7 years?

My opinion is as follows: ARM's are good if: 

1.You get big bonuses.

2. Plan on inheriting money to and plan to pay your balance down.

3. Plan to sell your home before the rate can rise or adjust.

BUT NEVER take an arm just to slide into a property without a back up plan otherwise your bet may be detrimental to your cash flow. To be clear I am talking about residential 1-4 properties as commercial property financing lives in the adjustable rate world. Have a good day 

I sit here in my office going about my daily business of assisting those who need mortgage financing. I glimpse at the right corner of my screen and there it is, the reminder that today is September 11^th. My eyes tear as I think back to where I was 13 years ago on that horrific day of unforeseen unimaginable tragedy. My thoughts are mixed. On one hand I feel a sense of guilt, grateful for my family’s outcome, and on the other hand, I am terribly sad and heartbroken for those families that lost their loved ones - the unbearable loss of heroes and friends on that fateful day.

I remember like it was yesterday. My wife, who was five months pregnant with our first child, was working as an attorney for the New York Department of Housing directly across from City Hall.  I was working from home when the phone rang. “Carl, my building shook what should I do?” My wife was on the phone. “They are telling us to stay.” I responded, “get out of there NOW!” Shortly thereafter, the second tower was hit. My pregnant wife made her way and walked from downtown Broadway to 58^th street and 5^th where my Mother waited for her to take the train to Queens. My wife told me how nice and caring strangers were to her on her walk to safety. Ironically, disasters usually bring out the goodness in New Yorkers.

I don’t ask why this happened because I am just a human being who cannot even fathom a just reason. I can remember this day along with the rest of the world, and mourn the memory of those that we lost way before their time. 

Remembering just does not seem enough. It seems too trite. I believe that the souls of those who left us on that day are looking down at us and waiting for something positive to come from their deaths. I would imagine that they might be wondering why in times of disaster and tragedy, people unify, and are helpful and respectful of one another, and yet, one day goes by and we return to our old ways. How soon we forget.

I asked myself, and now I ask you, how can we show those that we lost that tragic day, that we have learned and changed for the better because of their sacrifice. I would venture to say that we, at the very least, should also have to make some sort of earthly sacrifice. The sacrifice of self. We have to change our behavior and actions and remember and honor those that we lost that day. It sounds easy, but true change for the better is not.

May I make a humble suggestion? In the memory of those that left this earth on that Day of Sept 11^th let us try to:

• Be respectful to one another and our loved ones
• Not judge others
• Make time for friends and family
• Give the benefit of the doubt
• Be inclusive
• Be kind, caring, and courteous and…..

To always remember Sept 11^th as the day that sparked unity and love in NYC, the United States and the peaceful nations of this earth. We honor all those that left us that day. I am hopeful that they are looking down at us with the confidence and optimism that we will do our best to make sure that their souls remain perpetually at peace.

Avoid These Don’ts to Get Your Mortgage Financing

When you apply for a mortgage loan, avoiding the obstacles below will help minimize any delays during the mortgage process and lead to a smoother quicker closing (also, forewarned is fore-armed).

Don’t change your job, quit, or become self-employed before you apply for or during the processing of your mortgage. Job security and consistency are key factors in the approval process. If you change your job, you may need 30 days on the new job to count the income, and if you switch to self-employment (your own company or you work on commission) you need 2 years of self-employment to use that income to qualify. In addition, lenders will verify income by calling the current employer, asking for a CPA letter, and, in addition, pull a transcript of the tax returns filed using a 4506T. It is important to make sure that the tax returns supplied, are the actual tax returns filed. Often, copies of tax returns are supplied, and amendments are made in between, and the numbers on the 4506 transcript do not agree to the furnished tax return.

Don’t create a paper trail nightmare. Avoid last minute bank account changes and transfers. Today, the trail of all large deposits into a savings account must be verified to ensure that additional debt has not been taken out. If you are receiving a gift, bonus, repayment of a loan, or you are transferring funds, they must be documented so it is best at the outset to keep this in mind and do it or avoid it from the start (or call me to structure properly).

Don’t innocently run up debt during the process. Avoid buying or leasing a new car, getting new appliances or furniture on credit. Once you are qualified on your income, you do not want any surprises to surface that can affect your mortgage commitment. The additional debt can hurt your credit score, affect your rate, and more importantly jeopardize your loan approval as an increase in debt may affect your debt ratio ceilings allowed by the lender (The maximum debt the lender will allow calculated by debt/income).

Don’t have multiple credit reports pulled by different companies. This may lower your credit score and any inquiries must be explained to make sure no additional credit was taken in between the initial application and the closing. In addition, credit is re-pulled before a closing so it’s important to keep credit card charges below 50% of the maximum credit line extended and not to run up credit bills. Needless to say, do not pay late on bills especially during the processing of your loan. Drops in your credit score may cost you thousands of dollars, so please heed my advice.                                                       
Don’t co-sign on a loan for it becomes –your loan and shows up on your credit report as such. The debt may also affect your ability to obtain the mortgage loan you are trying to qualify for. If you have co-signed, some lenders may accept proof that the co-borrower pays the debt if you provide 12 months cancelled checks.

Don’t leave out liabilities that might not appear on your credit report. Aside from misrepresenting your actual financial situation (which may be construed as fraud), lenders will perform background checks and verifications and those left off liabilities may surface, slow the process down, and jeopardize the mortgage commitment.

Don’t spend your savings before you close. You need more than a down payment to get to the closing table. You will have tax and insurance escrows as well as closing costs so I would suggest calling a mortgage professional to get a strong estimate of exactly how much cash you should have on hand in order to complete the deal. You can also see what alternative and creative options you have in the event you are short on the cash needed to complete the deal such as: 

1.  Seller concessions
2. Lender credit for closing costs
3. A lower down payment program which may incur private mortgage insurance
4. A lower down payment program with lender paid mortgage insurance
5. Family gifts