Thoughts around mortgages & trends in the industry – from MLO David Cline, US Bank

We are constantly bombarded with information about mortgages and loans on radio and tv commercials, but what does all of it mean and how do you even know where to start? A lot of people have these questions and I wanted to go straight to the source to get the answers and thoughts about what’s going on in the industry from a Mortgage Loan Originator, David Cline.

David and I have worked on several deals together, he is extremely hard working and continually makes an effort to get to know all of his clients and be there every step of the way throughout the entire transaction. Working with a lender who understands your unique situation, is up to date on all the latest changes in the industry, and can put a loan together the fits your needs is extremely important to a successful closing.

Here are David’s thoughts on what buyers should look for when starting the loan process – the first step you should take towards buying a home:

#1: Pre-Qualification vs Pre-Approval

Pre-Approval is much more valuable and powerful than a pre-qualification.  A Pre-Approval means the bank has reviewed your income and approved a potential loan pending a purchase agreement, supporting appraisal, title and maybe a few closing conditions that need to be addressed.  When your real estate agent writes an offer for the client the offer now becomes very powerful and competitive in today’s market.

A Pre-Qualification is a generic approval based on the information provided by the client on the application but no income has been reviewed.  This gives you less buying power so make sure to get the full pre-approval.

Once you have a pre-approval, review the conditional approval with your loan officer to see what hurdles could arise between conditional and final approval.

#2: Explore Product Options

Don’t just jump into a 30-year loan with 20% down.  Explore your options and see what loan programs you qualify for.  Loan Officers have many products that could benefit each client differently.  Exploring options allows you to see differences in rates, payments and loan terms.

LPMI vs MI:  Lender Paid Mortgage Insurance vs. Mortgage Insurance

When using a program with less than 20% down payment ask questions around LPMI and MI programs.  LPMI, “Lender Paid Mortgage Insurance” means the client takes an increase in rate but doesn’t have a monthly mortgage insurance payment.  The bank pays the mortgage insurance at closing for the client.

ARM: Adjustable Rate Mortgage

The acronym, “ARM” or the words Adjustable Rate Mortgage scare most people.  It Shouldn’t.  Most of the clients at the bank that choose ARM mortgage products are your affluent investors or wealth management clients that use the banks money to leverage their assets to grow wealth.  You want to understand the ARM product before choosing it but they have benefits when used correctly.  A 10-year ARM usually has a lower rate than a fixed mortgage.

#3: Be Comfortable With Your Decisions and ASK Questions

Make sure your new payment fits your budget or if completing a refinance cash-out, make sure you are freeing up cash flow to fit your goals.  If you have any uncertainty or doubt just ask your loan officer.

#4: Ask for Lender Credits

A lender credit is when the loan officer gives you a credit towards closing cost or a credit towards buying your rate down.  Most loan officers have the ability to give these but you have to, “ASK”.

To contact David Cline:

Phone: 303.905.6022

Email: David.Cline1@usbank.com