D-Social Mortgage Blog

When should your client pay a point?  Most recently, paying the point saved my deal.  Earlier this week, I had a client who was reluctant in paying a point.  They were adamant on receiving a "No Point/No Fee" deal with an exceptional LOW interest rate.  It was almost futile trying to reason with them. I attempted to explain that with a "No Point/No Fee" loan interest rates are generally higher when you don't pay points.  I also tried to explain the concept of recouping the cost if they planned on living at the property for the long term, which they had planned on doing so. They also acknowledged that they were well aware of the concept. However, my gut feeling told me otherwise. I believe his prior negative experience with his previous loan agent was a factor in his mind-set.

I realized that a visual explanation was key in communicating my point (no pun intended) across.  A visual also benefits the client(s) because they are able to take this information with them for reference and review should they need additional time to do so.

Quickly I drafted a scenario of the simplest loan situation for my client.  If your client borrows $300,000: 

1.      Basically 1 point is equivalent to 1 percent = $3,000

2.      If you decide to pay a point of $3,000, it will save you $100 a month

3.      This means it will take you 30 months (or 2.5 years) to recuperate the point paid

4.      If you refinance or sell your property prior to the specified duration of 30 months, it does not make sense for you to pay the point. 

5.      1^st compensating factor when deciding when you should pay a point is the length of time you plan on keeping the property.  Paying for a point will only benefit you if you intend on keeping the property long term. 

6.      It is important to be aware that interest rates run in cycles

7.      When rates are at historical lows, it is also a good idea to pay points.  Again, if you are keeping the property long-term, this will benefit you.

8.      When rates are high there is a probability that they will also drop soon thereafter.  This would not be a good time to pay points.

9.      Tax deductibility is another is factor to consider

10.  Overall, there are many factors to consider when choosing to pay points or not. 

I realize this scenario should be a trivia to many of us - the basics of our profession.  But what saved me in this deal was the fact that I went with my gut instinct and was adamant in showing the pros & cons of a point vs. no point loan.  My client was confident they knew everything so I returned stubbornness with perseverance and educated them with the facts.  During these challenging times, not only do we need to be on top of our game, we need to be able to listen and analyze the whole scenario.  Assuming could lose us the deal.

                                USDA 100% Guaranteed Housing Program with No MI.

JFrank Capital Mortgage is excited to share that we are now offering a very attractive 100% Financing Program which is offered by USDA Guaranteed Rural Housing Program. And unlike the other 100% programs available, one of the unique components is that there is No MI - that's right - No MI.

You may be asking what is considered Rural? Rural is defined as any town of 20,000 or less that is not adjacent to a large city or urban area.

We realize the recent challenges in getting borrowers and homeowners approved these days. Anywhere from downpayment issues, low credit scores, high loan-to-values, declining market, and stringent underwriting guidelines. If you've experienced all of the above, the USDA Guaranteed Home Program should help you and your clients.

This program is truly one of the more attractive 100% Loan Products available for the hard working class families of California. Whether they're purchasing and/or refinancing. We want to spread to word the old & new fashion way utlizing word-of-mouth and social networking contacts online.

Here's a brief snap shot of the requirements:

• Purchase or Refinance (rate & term only)
• Owner occupied, 1 unit
• Min fico 580
• MI not required, however, a RD guarantee fee is charged at closing
• No adjustment for declining area
• Property must be located in Rural Area (call or email me for list)

For more information, call me directly at  415-407-6522  /  800-810-2080  ext. 101 or email: jeffd@jfcapitalmortgage.com

Thanks for your time!

Jeff De Loyola

Today's mortgage industry is evolving daily. Mortgage brokers and loan originators are experiencing the daily grind of getting loans approved--in other words, the lenders are scrutinizing files and taking longer to getting loans approved. Todays industry is challenging and loan agents can't worry about the loan process because they need to concentrate on selling, selling and selling. As the cost of keeping good loan processors and underwriter rises, outsourcing loan processing and underwriting is becoming the way of the 21st century for mortgage brokers to stay competitive.Outsourcing Loan Processing companies are becoming the wave of the future and solution. There goal is to  assist the agents in getting their loans closed quickly while avoiding the cost of a full-time mortgage processor. This automation process should  definitely stream line  the efficiency and time management, but how will the seasoned veterans accept this new technology? Will they accept the automation process to succeed in this volatile market?          What was your worst & best experience in loan processing?