Tuesday, August 26, 2008

Fix and Flip Program for Colorado and Arizona Real Estate Investors

For investors interested in taking advantage of resuced property values by participating in renovating and re-listing properties should take a look at the great investor program we are offering our clients.

This product is specifically designed to accommodate investors who want to purchase and remodel fix-up properties in order to sell them for a gain or to refinance them under conventional terms once the property has been remodeled. The program not only works for 1 to 4 residential units, but also for commercial properties which have 5 or more units. The program is offered in metropolitan Denver, Colorado and surrounding cities, also in metropolitan Phoenix, Arizona and surrounding cities. The loan term is for 180 to 360 days, depending on property type. There are NO prepayment penalties and interest only payments are due monthly.


Our investor lends up to 90% of the purchase price and additionally lends 90% of the improvements that the borrower estimates they will make to the property. The borrowers are allowed to do work to the property themselves as it is not required that contractors complete the work.

We can use equity in other properties (known as cross-collateralization) for the down payment on the fix-and-flip property so that the borrower does not have to put cash into the transaction, provided that our loan-to-value and other guidelines are met.

We allow the properties to be titled in the name of corporations, partnerships or limited liability companies. This is very popular with fix-and-flip investors.
Borrowers who are self-employed find the loan quick and easy to qualify for because we have flexible income underwriting.

We do not have a specific limit on the number of investment properties that the borrower has financing on.

We close these loans very quickly. We typically provide approvals within 24 hours and many closings occur within 1 (one) week of approval. Our quick closings often help the buyer get a contract over other prospective buyers.

We do not have any prepayment penalties. Naturally, this is of great importance to fix-and-flip investors.

We allow partial releases of multiple unit properties.

Monday, August 04, 2008

26 Commercial Property Types Available in All 50 States!

26 Commercial Property Types Available in All 50 States! Wholesale Loans down to $250K to $100+ million with middle score down to 650.

Apartments, Multi-Family 5+ Units
1-4 residential next door to each other adding up to 5+ units
One time close construction to perm Multi-Family properties
Mixed Use as small as one apartment component and one commercial component
Mobile Home Parks 3 star or higher
Single Tenant
Office Buildings
Office Condos
Strip Malls
Retail Shops
Lt Industrial + Warehouse
Auto Service, Tire Shops
Day Care
Assisted Living Care and construction to perm
Flagged Hotels/Motels
Country Clubs & Golf Courses
Funeral Homes
Bed & Breakfast
Grocery Stores
Car Washes
Bowling Alleys
Movie Theaters
Bridge Real Estate Loans from $1 Million to $15 million

Contact James Holmes Directly at 303-350-1768

Friday, September 14, 2007

Steps for Instant Pre-Approval

Please follow these steps:

Step 1:
Log onto our website using the following link and complete the loan application.


Step 2: Fax the following documents to James Holmes at 303-468-8445. Here is the checklist
1.) Pay stubs covering the most recent concurrent 30 day period. 2.) Bank statements for your checking and savings accounts covering the most current two month period and quarterly statements for all 401K and IRA accounts. Please be sure to include all pages of the statement regardless of the information contained on each page.

Step 3: Shortly after receiving your application we will send you initial loan disclosures via email. Print, sign and return the disclosure documents to James Holmes at 303-468-8445. Please Note that signing the attached disclosures does not obligate you to closing a mortgage loan with our company.

Once we have received your information we will immediately process your request and issue a letter determining whether your application is pre-approved and the terms available to you disclosed on a Good Faith Estimate and Truth in Lending disclosure.

Please feel free to contact me directly with any questions you may have. I appreciate having the opportunity to assist you with the purchase of your new home. My goal is to identify your goals and priorities and help you find the correct mortgage program to meet your needs.

Today is a great day for action!


For Information on how to obtain up to $25,000 in downpayment and closing cost assistance contact James A. Holmes, Director of Private Mortgage Banking, Chartwell Mortgage Corporation - The James Holmes Lending Team at Private Mortgage Banking or by calling me toll free at 888-850-6100 or email at james@privatemortgagebanking.net

Friday, August 03, 2007

Denver Metro Bond Announced for First Time Home Buyers

I am pleased to announce that we are once again participating in the Denver Metro Bond 2007 B&C Program, which enables us to offer a 4% Down Payment Assistance Grant to borrowers who qualify; please note that this is bond (not a mortgage) and the funds DO NOT require repayment. In addition, the 30 year fixed rate mortgage provided as part of the program is offered at a preferred interest rate of 6.59%.

Following are specific details associated with the program:

6.59% with 4% Down Payment Assistance Grant

We believe that this 6.59% interest rate (30-year fixed rate, 1.00% origination fee/0.00% discount) is an excellent rate in the current market! Moreover, it will provide a tremendous benefit to the low- and moderate-income first-time homebuyer families throughout Denver and the surrounding participating cities.

Here are the basic program requirements for eligible mortgagors:

Eligible Loan Area: Mortgage loans under the program may be made to qualifying borrowers in the City and County of Denver, as well as in the following jurisdictions of the Metro Mayors Caucus that have chosen to participate in the 2007B&C program to date: Arvada, Aurora, Bennett, Brighton, Broomfield, Centennial, Dacono, Edgewater, Erie, Federal Heights, Frederick, Golden, Greenwood Village, Lafayette, Littleton, Lone Tree, Longmont, Louisville, Northglenn, Sheridan, Superior, and Westminster.

First-time Homebuyers: Borrowers cannot have owned a home in the past 3 years (except if purchasing homes in "Targeted Areas"). Targeted Areas are census tracts designated by IRS and will be specifically identified in the Agreement. In addition, qualifying Veterans need not be first-time homebuyers in this 2007B&C program.

Maximum Family Income: Non-Targeted Targeted
Families of 2 or fewer $71,700 $86,040
Families of 3 or more 82,455 100,380

Maximum Acquisition Cost: 1 Family Residence $365,175 $446,325

Additional Mortgage Loan Terms: Mortgage Loan Term – 360 months

Rate – 6.59%
Origination Fee – 1.00%
Discount Fee – 0.00%

The funds will be allocated on a "First Come, First Served" basis and I have created a very simple process for you to refer your clients, have them apply, reserve their funds and submit their documents.

Five Steps to Loan Approval

Here are the steps:

1. Direct your borrowers to http://www.privatemortgagebanking.net/ where they can read the program guidelines.

2. Have them follow the "Apply On Line" link found on the upper right corner of my home page. Have your clients complete the "Complete - Full Application," here is a direct link to the form - https://rwstools.com/loan-app/startloan.asp?PVLID=5351&refer=&ACCTID=307458

3. Have you clients fax 1.) A pay stub covering a 30 day period for each of their employers. 2.) Copies of their 2007, 2006, 2005 1040 Federal Tax Return with ALL schedules. 3.) The most recent two months bank statements for all checking and savings accounts, and the most recent quarterly statements for all IRA, 401K and investment accounts.

4. Name address and contact information for their landlord. THE FAX NUMBER IS 303-468-8445

5. Mail a check in the amount of $25.00 payable to Cherry Creek Mortgage Company to pay for their credit reports. The $25.00 fee will be credited to the borrowers HUD Statement at closing.

6. Once we receive the borrowers application and credit report we will obtain automated underwriting approval and issue pre-liminary loan approval.

Please feel free to contact me with any questions you may have and please keep in mind the reservation is in the name of the borrower, not the property address.
I hope that you are able to take advantage of this fantastic program. We were fortunate to close a number of transactions with the 2006A and 2007A programs and the borrowers were very pleased with the outcome.

Mr. James A. Holmes, CML, CMPS Certified Mortgage Planning Specialist
Private Mortgage BankingCherry Creek Mortgage Company, Inc.The James Holmes Lending Team Office: 303.840.2319 Fax: 303.468.8445

Integrity. Expertise. Exceptional Value.

Tuesday, July 03, 2007

Valuable Information for Flipping Real Estate from Armando Montelongo of the Hit A&E Series "Flip This House"

Click here to join ArmandoMontelongo.com

As many of you know, I have been on an interesting journey since making my debut in Real Estate Reality Television by virtue of the HGTV hit series "My First Place." One of the greatest joys for me has been meeting a variety of new people who share my passion for real estate and my love for the emerging media called reality television. I have had the good fortune of getting to know David & Melina Montelongo and Armando and Veronica Montelongo all from the A&E show "Flip this House," and successful real estate investors from San Antonio, Texas.

As I have previously posted, I have had David Montelongo on my radio show and have posted his tips for real estate investors. Please see: One hour of education from an expert...PRICELESS. In addition, we are looking forward to participating in David and Melina's investor workshops this summer and fall in Texas.

There is something very important that I want to share with you today. Armando Montelondo has authored a new e-book titled "Flip it Now!" and as part of the launch Armando is making five pages available to you free of charge.

If you are interested in obtaining your five free pages of the book click on this link:

Armando has also teamed up with Internet millionaire Joel Therien, president of http://www.hotconference.com/ a very popular website and has launched a new site Armando Montelongo . Armando Montelongo's new site is very different in that it allows people to communicate in real time audio and video conferencing in a secure environment. People can join free knowing that others on the site will enjoy learing about their opportunities. The site is a social networking site catered to one market, entrepreneurial people and business opportunity seekers. "The site is there for all types of people who want to meet with others who have some of the same business interests" says Therien. The site caters to success minded individuals.

You can visit the site at:

Saturday, June 23, 2007

We Value Our Clients and Build Relationships

For the majority of people a home mortgage is the largest debt obligation incurred in their lifetime and the manner in which this debt is managed will impact their long term financial well being. The selection of a mortgage product is a significant financial decision and should be undertaken with full knowledge of your options and how your choice will affect your long term objectives.

We live in a world based on immediate gratification and often we are underserved by the advisors we depend on to provide expert advice in a variety of areas. Our approach to mortgage banking and the loan process is unique; we view our loan process as financial planning specific to the mortgage transaction. We begin every client engagement with a personal consultation, which allows us to identify your priorities and objectives for the transaction. Our goal is to determine which loan products address both your short term and long term goals while meeting your payment and equity requirements.

Successfully closing your loan is only the first phase in a long term partnership with a long term view of ensuring your financial security. Our “preferred client for life” program is designed to assist you in managing your mortgage debt and equity on an annual basis. Annually we will conduct an annual review to ensure that your mortgage continues to meet your needs. It is important for us to understand the events in your life that affect your finances and how we can help you maximize your opportunities. We have designed our website to provide you with valuable information about the loan process, product choices, and how to make the most of your real estate investment.

Thank you for providing us with an opportunity to serve you.

Stop Paying Your Landlords Mortgage Payments. Now Is The Perfect Time To Buy A Home.

I have made a strong commitment to assisting first-time homebuyers in their quest to obtain the dream of homeownership by utilizing a variety of low interest, low cost assistance programs. We partner with County, State and Federal agencies along with Quasi-Governmental agencies to provide access to the mortgage products needed to serve a broad number of first-time home buyers.

I've marvel at the prospect of an individual choosing to rent in an environment that makes homeownership so attainable. If a person rents an apartment for $550 per month over five years they will have spent $33,000 with nothing to show in return. A person renting a single family home for $1,000 per month over five years will have spent $60,000 with nothing to show in return. Now, the landlord will be pleased to have interest paid, loan principal reduced, tax benefits received and equity appreciation gained thanks to the timely receipt of the renters hard earned dollars.

According to a study by the Metro Denver Economic Development Corporation as reported on their Monthly Economic Summary for March 2007: "the apartment vacancy rate in Metro Denver increased slightly from third quarter to fourth quarter but the fourth quarter 2006 vacancy rate of 7% stands well below the 7.9% vacancy rate reported a year earlier. For the year, the average vacancy rate in the seven-county region declined from 8.2% in 2005 to 7% in 2006. The study also reported that the last time the annual vacancy rate was lower than 7% was in 2001 when the metro region posted a 6.4% rate, and in the last five years about 25,000 rental units have been added to the market. The average monthly apartment rent also decreased from third quarter to fourth quarter. On an annual basis, the average apartment rental rate was 1.2% higher in 2006 than in 2005."
For More Visit:
The current trend of declining vacancy rates is expected to continue; add to that an increased rental rate, which some analysts have projected to increase as much as 4% over the next twelve months and you have an unfavorable environment for renters. The bottom-line is that the sales slump in the Colorado's housing market coupled with the general tightening in loan underwriting guidelines has resulted in fewer buyers, higher demand in rental units and increased rental rates. For renters who can qualify, now is the time to take advantage of low interest rates, increased inventory, seller incentives and a variety of assistance programs by purchasing a home now.

We emphasis the benefits of equity appreciation and the monthly cash flow benefits of owning a home as a result of interest and property tax deductions. I recently assisted a client who was struggling with the idea of increasing his monthly housing expense from his present rent of $1,500 to a new mortgage payment of $2,050; once he realized that the net effect of his tax deduction would return $408 in monthly cash flow his net increase was only $142 monthly to own a home of his own.

The rent vs. buy decision is much easier to make once a renter grasp these concepts including the wealth building aspect of equity appreciation. All else being equal, I cannot think of a reason why anyone would be better served renting as opposed to buying a home of their own.

For Information on how to obtain up to $25,000 in downpayment and closing cost assistance contact James A. Holmes, Director of Private Mortgage Banking, Cherry Creek Mortgage Company - The James Holmes Lending Team at http://www.privatemortgagebanking.net/ or by calling me toll free at 888-850-6100 or email at mailto:james@privatemortgagebankinking.net

Wednesday, February 28, 2007

New Homeowners Benefit by Empowered Living Program

We are looking for individuals that have the desire to own a home but due to a lack of down-payment, credit concerns or just plain fear, have not been able to purchase their first home. Purchasing a home is the first step to economic empowerment and we have created an initiative called "Empowered Living," which is designed to breakdown barriers to homeownership in association with our strategic partners.

Through the Lone Tree office of Cherry Creek Mortgage Company - The James Holmes Lending Team, we provide a gateway to access a wide variety of first time buyer programs, which will provide our buyers with as much as $25,000 to be used for down-payment and closing cost. The James Holmes Lending Team is a lending partner for the Douglas County Housing Partnership program among other programs. We will in effect become the coach for the first-time buyer and provide education, mentorship, access to the MLS system to access properties, provide discounts and incentives from our builders and related partners.

Many renters can buy a home with little or no major increase in their total monthly payment obligation once the tax savings from owning a home are figured into the equation. If you pay $900 per month for rent over the next two years you will have paid $21,600 toward your landlords mortgage. We would like to help you convert those funds into equity in a home of your own.

If you would like to know more or schedule a private consultation, please visit my website at http://www.privatemortgagebanking.net/ and either email James Holmes directly at 303.840.2319

Saturday, February 24, 2007

Real Estate Today! Radio Show Commentary from 02-24-2007

The Real Estate Today Team has launched an initiative we call "Empowered Living," designed to identify, coach and create a minimum of 100 first-time home buyers in Colorado by the conclusion of 2007. In addition to assisting the buyer with the selection of the best valued home available, we will also provide access to a variety of down-payment assistance programs including grants and low interest loans with payments deferred for up to five years. I would like for anyone who is currently renting and wishes to achieve the dream of home ownership to contact me at http://www.realestatetodayshow.com/ or contact my office at 303-840-2319.

We have developed a valuable resource for fix and flip investors. Please contact us and request your free "Fix and Flip Investor Resource Guide."
We have a free resource to allow individuals to access all of the available listings in the Multi List System (MLS) using a private password protected website. To register, log on to http://www.RKYMTNMLS.com/.
I admit that I am a fan of real estate reality television and I think the programs on both A&E and TLC serve to show what is possible and the potential pit falls when flipping real estate. I had the honor of welcoming David Montelongo of Montelongo House Buyers and the hit reality television show “Flip this House” as a guest on our radio broadcast the Real Estate Today Show. I think that the Montelongos represent what is possible in a very entertaining way; they have a wonderful family story. Needless to say, David’s appearance on our program was greatly anticipated.

David shared ten tips for becoming a successful real estate investor and provided me with permission to post these on my blog.

Here are David’s Tips:

1. Forge strong relationships with foreclosure agents so that when a new listing comes up you’re the first to hear about it.

2. Create a power network of fellow investors, a TRIBE, if a deal doesn't work for you, it may work for someone else in your network.

3. Try not to see other investors as competition, but as allies. This will create opportunities to be involved in more deals.

4. Set your construction budgets early, do everything in your power to stick with your budgets.

5. There are always unforeseens give your budget a line item for cost-overruns.

6. Have your Contractor visit the property with you BEFORE you close. This will remove some of the unknowns.

7. We are all motivated, both positively and negatively. If you find your positive motivation, it will be easier to find the next deal.

8. You are the greatest asset you possess. Invest in your education. Every time I attend a RE workshop I come away with a new technique.

9. Join your local Real Estate Investor Association; this is a great resource for rehab lenders.

10. Don’t be afraid to partner on a deal, partners can leverage each others strengths to create a win-win situation.

During my research for the show, I discovered that both David and his wife Melina share a heart to give back to the greater real estate community and they wish to share their success with others. I believe the cycle of living, learning, succeeding and giving back is the essence of significance. The response to our shoe was wonderful resulting in great questions on air from our listeners and calls from Realtor partners and several investor clients of mine who regularly listen to the program. The subject of fix and flips is a popular one on our show and the opportunity to learn from an expert was tremendous.

Friday, January 19, 2007

Understand Your Credit Scores and Win the Game

I cannot over stress the importance of monitoring your credit scores annually to ensure that you pay the lowest rates on home mortgages, auto loans, credit card debts, and safeguard yourself against identity theft. In times past credit scores where used most often to develop your risk profile in consideration for a loan and to set interest rates. Today, property insurance carriers and life insurance carriers consider credit scores when setting premiums and this trend is evolving into a variety of industries.

A consumer’s credit history is archived by three service providers; Equifax, Experian, and Trans Union and their databases are often consolidated into a single report by third party credit agencies. The report is generally referred to as a credit report and it includes a credit score issued by each service provider. The scores range from 350-850 and are graded based on a set of criteria which includes payment history, account balances as compared to credit limits, amount of recently accumulated credit and inquires, among others factors.

The following generally outlines how a variety of traits within your profile may affect your credit scores and risk profile: Length of Credit History 15%, Payment History 35%, Credit Balances Owed 30%, and Recently Obtained Credit 10%. According to Colorado based Advantaged Credit of Colorado an example of a consumer’s favorable profile would include two installment loans, three revolving accounts with balances, balances on revolving debt below 30% of the high credit limit, no collections, no public records (judgments or liens), no foreclosures, no late payments.

My advice would be to obtain a copy of your credit report annually. This can be done by contacting each of the three credit service providers directly, or by accessing free online resources such as http://www.annualcreditreport.com/ . Once you have obtained your report, review it carefully for discrepancies including inquires made against your credit files. Report inaccurate information directly to the associated credit service providers; keep in mind that the information retained by the three providers may vary and the data is often 30-60 days delayed, so some information such as account balances may not be accurate. The law provides consumer protection and false information must be removed by the reporting entity.

Bottom Line: To safeguard yourself against identity theft or credit fraud review your credit report annually, immediately report any discrepancy; ask your property and casualty insurance agent if you are eligible for premium discounts for high credit scores. It is also important to make lenders aware that you understand that interest rates are a reflection of risk and that your good credit should be rewarded with the appropriate interest rates. If you have legitimate credit problems, seek the advice of a qualified credit consultant and develop a strategy to restore your credit profile. Beware of anyone who promises that they can remove negative information from your report for a fee, legitimate information cannot be removed and you will be disappointed.

Resources: Here is the contact information for the three credit service providers: Equifax 1-800-685-1111 http://www.equifax.com/, Experian 1-888-397-3742 http://www.experian.com/, and Trans Union 1-877-322-8228 http://www.transunion.com/

Green is Becoming the Color of Real Estate

The environmentally conscious are gaining allies in residential construction from the efforts of Built Green Colorado; which is administered by the Home Builders Association of Metro Denver with the support of the Governor's Office of Energy Management and Conservation, Colorado Association of Home Builders and E-Star Colorado among others. The designation "Built Green" is issued to builders who chose from a list of more that 200 building features in 22 categories; including materials, resource conservation, energy efficiency and conservation of resources. Builders must obtain a minimum number of points accumulated by the inclusion of building features in order to register their project as a Built Green Community.

There are six primary benefits derived from the Built Green program: 1. Better Energy Efficiency. 2. Improved Durability and Reduced Maintenance. 3. Healthier Indoor Air. 4. Reduced Water Usage (this is critical in Douglas County). 5. Preservation of Natural Resources. 6. Pollution Reduction.

Special financing known as "Green Mortgages," are available to finance the purchase of a new Built Green home as well as to cover the cost of improvements to an existing home. As a result of energy savings the total housing cost resulting from these mortgage products are lower than the cost without special financing. Not all lenders offer Green Mortgages, so it is important to identify a lender familiar with these programs. I have estimated that a client utilizing our Green Mortgage product can achieve a savings of $45 per month on a $250,000 purchase price. The homebuyer could purchase an additional $7,500 in home value for the same payment by using the Green Mortgage program.

One example of a Built Green Community is the Highlands at Stonegate located at the southwest corner of C-470 and Jordan Road in Parker. The community is comprised of nearly 450 contemporary designed units containing a number of environmentally friendly features and building materials. Communities like the Highlands at Stonegate represent a tremendous value and appeal to buyers who recognize the benefits to the environment.

Those old enough to remember the environmental friendly homes of the 1970's will recall seven foot tall solar panels on roof tops and walls manufactured from old car tires; this in no way is representative of the Built Green home of today. The majority of features are not noticeable to the untrained eye; engineered lumber, low-e windows, fiber-cement siding, energy efficient appliances, and xeri-scaping all contribute to a beautiful and efficient alternative to traditional construction materials.

As consumers become more conscious about greenhouse gas emissions and the effect of global warming on our environment, many industries including the automobile industry and public utilities are seeking ways to satisfy the demands of the public for responsible management of our natural resources. Built Green Colorado has taken a key leadership role within the new homebuilder community in Colorado and residential communities throughout the state are seeing green.

Monday, January 15, 2007

Prepare Yourself To Obtain The Mortgage That Is Best For You

As we welcome a new year filled with endless possibilities to achieve your financial goals and chart a course for long term financial health; one of the most important pillars to consider when laying your foundation is the role that real estate will play in accomplishing your objectives. If you are a homeowner, the task of managing your equity includes an occasional review of the structure of your mortgage to ensure that your loan addresses present needs and maximizes your opportunity to grow the equity in your home. If you are in the market for a new home mortgage, there are practical considerations to take into account when considering who you should trust as an advisor and ultimately which loan program is right for you. Here is a practical guide to ensure that you make smart financial decisions.

Understand Your Time Horizon

The term of the loan product you chose should be directly tied to the length of time you intend to own the property. For example, one of my clients was working as a resident at CU Medical Center and there was little doubt that he would be relocating upon graduation from the program. The young couple came to me prepared to sign a 30 year mortgage as this is what their parents had recommended. The time horizon for my clients was a maximum of three years and a three year ARM was a more appropriate choice for them resulting in a significantly reduced interest rate and substantial interest savings. Simply stated, if you are planning to move in the next three to five years a thirty-year fixed mortgage would likely not provide you with the lowest possible costs.

Understand Your Risk Tolerance

Everyone has a tolerance for risk and your ability to live with your mortgage and sleep well at night requires that you understand where you are on the risk scale. I have clients that are willing to trade the volatility of adjustable rates for the periodic advantage of a lower initial rate, the idea of a thirty-year mortgage is completely foreign to someone with this profile. By contrast, I have clients who would be best served having an adjustable rate mortgage, but could not bare the uncertainty of knowing what their payment will be for the next 30 years regardless of their true intention to remain in the property.

Understand Your Credit Profile

Credit profile is comprised of two important factors, credit scores as reported by Trans Union, Equifax and Experian, and your capacity to repay the debt. Credit scores range from 360–850 and take into account a number of factors including payment history, account balances, age of accounts and inquiries. Generally speaking higher credit scores result in lower interest rates and better terms. Borrowers should strive to maintain credit scores of 620 or higher. Capacity is a measure of your ability to repay the debt as determined by your verifiable or stated debt to income ratio, typically not to exceed thirty-six percent of your gross income. This is a guideline and other factors such as high credit scores may allow you to stretch to fifty percent. To determine your debt to income ratio take your total monthly payments on your mortgages and consumer debt such as credit cards, car loans, etc. and divide the total into your gross monthly income.

Understand How Technology Can Work For You

The internet has changed the way we receive and process information becoming a useful tool for researching a home mortgage. Consumers should be very careful when using the internet as more than a research tool when acquiring a mortgage; surveys indicate low satisfaction rates among consumers who obtain a mortgage over the internet. The most effective strategy combines the information gathering utility of the internet with the personal consultation of a competent mortgage professional. The most advanced mortgage lenders utilize their websites as a resource tool for their clients and provide personalized service to ensure client satisfaction.

Another significant change has been the development of automated underwriting tools which allows lenders to weigh a borrower’s total risk profile against program guidelines making it easier for a larger range of applicants to qualify for a mortgage.

Understand That Interest Rate Is a Function of Risk

The interest rate a lender charges a borrower is directly related to the risk associated in making a loan to that specific borrower. It is not reasonable to expect a lender to provide a borrower with poor credit scores the same interest rate as someone with an excellent payment history. Be realistic about your qualifications and if you believe you are not receiving the rate you deserve ask your lender to provide you with a complete explanation of how your interest rate has been determined. In addition to explaining your credit profile, your lender should also explain the adjustments made to the final interest rate.

Understand Your Options Concerning Interest Rates and Loan Fees

A borrower who is shopping for the best mortgage rate can easily be seduced by low rate offers that are accompanied by low Annual Percentage Rates known as APR. Federal Law requires that APR be disclosed in addition to the actual interest rate when pricing a mortgage. Although disclosure of APR is intended to provide the borrower with enough information to make an informed decision; the reality is that APR may not be the best way to compare options when shopping for a mortgage and can mislead a borrower resulting in costly errors.

Consider buying down the interest rate by paying points (equal to a percent of the loan amount) and explore a no costs loan, whereby the total costs of the loan are factored into the interest rate. In order to determine if either choice is right for you, know your time horizon and be clear about your objectives. A competent mortgage professional can walk you through the evaluation process and provide you with a written comparison of loan programs and pricing structures.

Understand Potential Pitfalls and Protect Yourself

Prime loan programs also known as “A Paper” loans typically do not include a pre-payment penalty, by contrast the majority of sub-prime mortgage programs have associated prepayment penalties. In the event that the mortgage balance is dramatically reduced or paid in full prior to the end of the prepayment phase, a significant penalty can be charged to the borrower. A typical prepayment penalty is equal to six months interest on 80% of the principal balance for a period of one to five years. A prepayment penalty could in effect lock a borrower in to a loan program eliminating the option of refinancing in the near future.

Beware of loan program with extremely low initial interest rates, not everyone will win the lottery and the day will come when the interest on the fully indexed rate will come due. Loan programs tied to monthly adjustable indexes and programs that allow a monthly payment less than the interest due will cause negative amortization, which results in an increasing loan balance and loss of equity.

The Bottom Line

By understanding your unique qualifications, doing your homework and seeking the advice of a qualified mortgage lender, you can successfully navigate the waters and obtain the loan that is best for you.