The Mortgage Option

Every year around this time, my business increases. Loan officers, mortgage brokers, and branch managers--in a flurry to set goals and make resolutions for the New Year-- look for training services to improve their skills. They have high expectations for the year ahead, and rightly so. Everyone wants to succeed in their business.

But, what happens on January 2nd? How about by February? March? April? Eeeeeek!!! Momentum starts to slow down and we all fall back into our old habits. We get too comfortable and our sales pipelines suffer. Remember, the loans you originate this month, are the ones that will close next month. In the mortgage business, we must not look just at today’s “sales” figures, but at tomorrow’s loans that are slated to close. How many loans have you had fall-out or die because of a stupid, little reason? Too many. And that is money out of your pocket.

If I added-up all the loans I have “lost” over my career, it would be in the many thousands, likely hundreds of thousand of dollars in lost commissions. If the average loan is worth about $3,000 to $6,000 each, you don’t have to lose many before you begin to take notice. Not every loan will be a winner. But, you have to deal with a certain amount of losers before the winners will pull through.

I stopped counting loans as being “sold” until they actually hit the closing table. That way, I don’t disappoint myself or count my chickens before they’re hatched. I suggest you do the same. It also makes you work hard for every loan and actually will improve the number of loans you ultimately close. It’s interesting psychology.

Just this week, I spoke to a good client of mine who has been in the loan business for about 4 to 5 years. She was very upset and told me that she lost a deal worth about $15,000 or so (it was a sizeable jumbo loan). After discussing things at length, and reviewing all of the steps along the way, we came to the conclusion that the loan died NOT because she did something WRONG, but because she did everything RIGHT! Ironic isn’t it?

She followed all the proper steps, worked diligently with all the third parties such as appraisers, title companies, etc., and set the proper expectations on when the loan would ultimately close. But, although she was extremely pro-active and had all her ducks in a row, she couldn’t control the most important factor in the loan process…HUMAN NATURE.

The customer was being less than truthful, playing games to avoid calls and had even lied on a few things upfront. The deal died. And so did her Christmas commission check. But, she was counting on that loan to pull through. After all, she did do everything “right” on her end.

My point here is simple…you can plan all you want, set all the goals and forecasts for the coming year with the best of intentions, but you can’t control human behavior. It’s the most critical factor in the loan process, and can mean the difference between success and failure.

As you gain more experience, you will learn how to silently “read” a customer. You’ll know if they are truly serious about the loan and are being honest. You’ll discover small clues along the way in the borrower’s documents which will help you read the “loan leaves” (that’s tea leaf reading for mortgage people!). And, you’ll quickly learn my golden rule: “kill them, or keep them…quickly”. Don’t spin your wheels on loans that go nowhere. Your time is far too valuable, and the good loans will get away.

It has been said that the mortgage industry is the hardest yet easiest business to be in. If you are seasoned, it’s simple. If you are new, it’s not.

As you look out over a fresh year with high expectations, treat your sales people well, be loyal to your account reps, become your customer’s trusted advisor, and--above all--cherish your processor. Don’t become a slave to the sales numbers, remember that you can’t reach your goals without the help and cooperation of other people.

Go out and make this year your best year ever. Best of luck in your business and your coming success.

With every year, come new opportunities. And astute loan officers are quick to capitalize on what the new year brings, raising their commission levels and catapulting to top producer status in no time.

I ask you one simple question, “Are you doing everything you can to maximize your income?”

Anyone who has been in the mortgage industry for at least a year, knows that as home prices increase, so do the conforming loan limits from both Fannie Mae and Freddie Mac. January is a great time to go through your existing customer base, and drill for hidden opportunities. It’s “found” money. And it’s waiting for you.

Here’s a quick and easy way you can start your new year off with a bang.

Go through your entire past customer base, and pull-out all the “JUMBO” loans you closed last year and before. As you know, the interest rates on these loans are typically half a percentage point or more above standard conforming loans.

With the yearly increase in loan limits, this is a great chance to refinance an existing customer from a JUMBO loan, into a regular conforming loan and cut their interest rate! Even a small percentage decrease can save a customer hundreds of dollar in their monthly cash flow as well as thousands of dollars in interest over the life of their loan. It’s simple math and the savings are black and white.

Refinancing JUMBO loans into conforming loans is easy money and your customers will love you for it! How many loan officers do you know that are proactive and actually look for ways to save their customers money? Not many, I’m sure!

And the ones who do, do this, certainly aren’t going to share their secrets with you. But, I will. This will be the easiest sales call you’ve ever made! Not to mention the referrals you’ll get in return. It’s a win-win situation. Don’t miss the boat.

Your past customers are your greatest asset. They know you, they have a relationship with you, and they trust you. Waste no more time!!! I beg you! Go through your customer database now and mine for the gold that awaits you. What are you waiting for?

Using the same old thinking and doing the same old things the same old way will get you nowhere. Think different. Be proactive. Add value to your relationship with your customers whenever you can. Uncover the opportunities that lie hidden all around you. Do this and you’ll quickly vault to top producer status in no time. Not to mention your income and lifestyle will increase as a result.
In closing, always remember that each new year brings higher loan limits--and with it—a chance to pull in some quick, easy refinance loans. Whether or not you take full advantage and raise your commission level, is entirely up to.

The gold is there waiting for you, ready to be claimed. But, will you reach out and take it?

With interest rates rising rapidly, it is more important than ever to make the most of every loan. As refinances begin to dry up and you begin to deal more with purchases, you will undoubtedly encounter new roadblocks and hurdles on the way to the closing table. It’s a fact--purchase loans are far more time consuming and stressful than their refinance counterparts.

Borrowers are emotional, erratic, demanding, panicky, unsure, deliriously happy or sad and a whole host of many other emotions. In their minds, they’ve picked out the carpeting and wallpaper and have mentally already moved in! Geesh! Try dealing with a person who thinks they’re the landlord and they don’t even have the keys yet!!!

Keeping this in mind, here are some tips when dealing with purchase loans. These come from my years of experience and many number of loans (I’ve lost count.)…

1. Don’t show your hand too early (meaning the interest rate you can offer). Explain to the borrower that it is up to them when they decide to actually “lock-in” the interest rate. If they press you for an actual rate, tell them what today’s rate is you can offer, and that you will watch the interest rates for them. If they drop, you will call them at the first moment. What you really want to do here is knock the borrower off their “rate” short-sightedness. Say something like, “Well, as you know, the interest rates change every day. With purchase loans, time is critical. What we can do is get the process started, so that you don’t lose the house, and when the interest rates get to a point you feel comfortable with, we can lock it in for you. We will be working hand-in-hand through the entire process. Now, how do you spell your last name?”.

2. Explain the difference between a pre-qualification and a commitment letter. Borrowers think just because they have been pre-qualified somewhere, that it guarantees them the loan. This isn’t the case. As you know, the underwriter has the final say. If the property does not appraise for the correct value, the borrowers’ situation changes, or the seller pulls out, the deal is dead. These are things entirely out of your control. What I tell borrowers, is that we are going to go one step further than a simple pre-qual letter. We want to give them an advantage with their loan, and get them a full commitment letter from a lender as soon as possible. This lessons the chance of them getting their expectations set too high and not getting the loan in the end.

3. Phone the real estate agents early on and explain you are in control of the process. Call them BEFORE they call you. You want to show that YOU are in control—NOT them. Doing this, puts you at a higher level and they will respect you for it. Believe me.

4. Set expectations with the borrower upfront. Explain the entire loan process from start to end. First-time homebuyers just simply don’t know. Emphasize to them, if they have any questions, to call you first—NOT the realtor.

5. Make it known that you are the point of contact for all parties involved in the transaction. This includes the seller and buyer agent, appraiser, lawyer, title companies, etc. Usually, the realtor thinks they are in control for the whole process, but remember the sale is mostly out of their hands after the purchase and sales contract is signed. Then it is entirely up to you—the loan officer—to succeed! By being the “driver” in the process, you can minimize any confusion or crossed signals that may arise.

6. If you get a sales call from a borrower looking to purchase a home, ask if they have already been pre-qualified elsewhere. Most of the time they have been and are simply shopping around for the lowest rate. (In other words, go back to rule number one above… don’t show your hand too early). If the borrower shops behind the other loan officer, they will certainly do it to you too.

7. Explain to the borrower whether you are acting as a direct lender or broker. Each has pluses and minuses. Explain what you are and the role you play. Sell yourself. For example, you can say “As a lender, we have direct control of the process, we make the final decision and can tell you upfront whether you qualify.” or “As a broker, if you get denied by a lender, we can easily shop you to another lender, saving you time and effort. This will help you ensure you get the house you want and not jeopardize the process”. Sell your advantages…don’t mention your weaknesses.

8. Factor in all payments for the borrower, including the full principal, interest, taxes and insurance and be certain that the borrower is well aware of these entire costs upfront. If they can’t afford the house, you want to know as soon as possible. Or you’ll be left with nothing!!! I always say, it’s best early on to kill ‘em or keep ‘em. Don’t let timewasters run away with your income.

9. Watch critical dates, especially rate lock expirations and underwriting turn-times. Be well aware of the “commitment letter” date as stated in the purchase and sales contract on the property. Oftentimes, borrowers wait until far too late in the process before deciding to move ahead and these contract deadlines can be impossible to meet. Get an extension on this ASAP with the seller’s agent on the property.

10. Finesse your way through the process. Don’t lie. Only tell each individual party involved in the process what they need to know. Don’t share too much information…it creates confusion. And don’t tell someone something unless you are absolutely certain. It always comes back to bite you in the rear!

11. Stop the shopping. Make the borrower understand that once they decide to move ahead with the process, they risk losing the home, if they decide to leave you. Another broker/lender will be unable to meet the tight deadlines in the contract. They have to make a decision and stick to it.

12. Stop the shopping—part two. If the borrower is qualifying for a home based on a special program that your company is offering, tell them the criteria upfront. Not every loan officer has what you can offer. In other words, you have a specialized program and are making an “exception” just for them. Not all rates are created equal. The other “competitors” for the loan may not have all the correct information upfront, to be able to properly quote them an accurate interest rate. Let me emphasize that again—an ACCURATE INTEREST RATE. Educate the borrower on this, show them you’ve done your homework, and are quoting accurately. Ask qualifying questions that others don’t.

By keeping these tips in mind, it should make your next purchase loan go a lot smoother.

If you are looking for a firm step-by-step process to help you get your purchase loans to the table faster, please…please…please…take a minute to read about my Sink or Swim Loan Closing System at http://www.loanclosingsystem.com

And, as always, best of luck in your business. This is STILL a wonderful industry to be in! Stop being discouraged and go get ‘em!!! I know it’s tougher out there, but you can do it!

Let’s face facts. The mortgage business isn’t for the faint of heart. It takes guts and relentless determination in order to succeed. You won’t become a top producer overnight and your early months of being in this industry will be hell. There is so much to learn as a broker not only with the mechanics of the loan process, but also learning how to deal with difficult customers and balancing the demands of lenders and other outside third parties. It really is a juggling act. Picture the man at the circus with the 15 spinning plates and you’ll have a pretty good idea of what being a loan officer is really like.

If you are thinking of going into the loan business or know someone who is, here are some questions you should ask yourself before committing to this new career. Don’t be blinded by the commission---take a step back and look at the big picture.

Ask yourself…

1. Do you have a full 8-10 hours a day to devote at a minimum to your new career?

2. Do you have time in the evening between 5 and 8 pm to call people and free time on the weekends to follow-up?

3. If you intend to originate loans part-time, do you have the sufficient knowledge and education to know what you are doing?

4. Who will put out the fires on the loans when they arise?

5. Do you have enough savings set aside for you and your family to survive from during your “education” process in the start of your new career?

6. What will you do if you fail and the loan business isn’t for you?

7. Is your family supportive of your decision?

8. Do you have any experience in another area of real estate that will help you originate loans?

9. Are you joining the right kind of mortgage company that has sufficient support systems and back office structures set in place?

10. Do you have a processor who can work on your loans while you sell them?

11. Do you have a marketing plan in place to ensure you have a steady stream of new business?

12. Where will your leads come from?

13. If a customer says “yes” to a loan proposal, do you know what to do next?

14. Are you good at math and can you run numbers in your head?

15. Are you good at dealing with many different types of personalities and can you be “diplomatic” in tense situations?

16. Are you afraid of making “cold calls” or selling on the phone?

17. Do you have any previous sales experience which will help you?

18. Are you an organized person who pays attention to details?

19. How do you cope with high pressure situations?

20. Have you ever bought or sold property before and are you familiar with the process?

21. Do you know anyone in the loan business already who might be able to help you?

22. What are your expectations for your first 6 months?

23. Where do you see yourself in 5 years in this industry?

24. Are you doing this just for the money or do you have a “higher purpose” for wanting to work in this field?

By asking yourself these questions, they will help clarify your career goals and give you guidance before jumping into the industry. If you are a mortgage veteran or do any sort of hiring, I would suggest printing this list out as it will help weed-out the people who aren’t suitable. Their answers will reveal a lot!

Yes, it’s true. There is BIG money to be made in the mortgage business. But, please be aware that with the big paycheck comes a steep learning curve and a lot of long hours paying your dues. But, if you have the long-term vision to stay focused on your goals and keep your eye on the prize, you will do very well indeed.

Instead of asking if the mortgage business is right for you, a better question to ask is…“Are you right for the mortgage business?” Answer that, and you’ll be well on your way to becoming the next top producer.

During my public speaking and private coaching sessions, I cover many unconventional strategies that have helped me become a top producer in the mortgage industry. I’ve always been one to think out of the box, and my mind is always focused on how I can improve myself as a loan officer and become more successful.

Anyone who has been a reader of this newsletter--even for a short time--can see that the person who succeeds best, is the one who does things differently. I urge you to do the same. Don’t fall prey to the negativity in your office. Negativity is all around you.

Yes, I know rates are “up”, but he who gives up at the first sign of defeat, doesn’t get the loan at all. You must constantly follow-up with the prospect. And, even if now isn’t the right time for them to move forward…perhaps in a month or so, it will be! The mortgage market is extremely volatile, so don’t give up on those old leads.

One thing I learned early on, is how your vocabulary can dictate your success. How you choose to phrase things can have a dramatic impact on your bottom line. And, if more business is what you want—then never, ever, use this word: “APPLICATION”.

In the customer’s mind, the phrase “application” denotes a formal commitment, and a long, involved, lengthy process. Customers don’t want to be tied into something, until they are ready to make a buying decision. And they can’t make a buying decision, until they have a price. Up to that point, they just want answers. Point blank: They want to know what rate you can give them.

The best way to take a 1003 application is to NOT take one. That’s right, don’t do it.

Do what I do, simply take out one of my Pre-Qualification worksheets (or use one of your own) and say to the customer, “Do you have a few minutes, so I can see how low a rate I can get you?”. And then begin filling it out. Jump around the worksheet if you like. The important thing is to keep the conversation going, and not have and “dead air”.

Do you see the power in this sentence, “how LOW a rate I can get you”. It changes the whole conversation, and put it in your customer’s best interest. In one sentence, you have transformed yourself from an “order taker” to a “trusted advisor”. And customers hear a direct benefit for giving you additional information. It’s also non-intrusive and asks their permission for just a few minutes of their time. Who doesn’t have “just a few minutes” to see “how low a rate they can get”? Don’t you?

Once I test the waters with my pre-qual worksheet, I simply steer the conversation to the 1003 application and begin filling it out. And the best part is, the customer doesn’t even know I’m doing it! I just do it!

Because I’ve created great rapport with the customer already and asked questions that other loan officers forgot, things flow naturally and smoothly. Very quickly, I get what I need in order to price the loan out with the lender, and the customer gets what he needs--a set price.

So, next time, before you mumble the word “application”, and scare the customer away, remember my phrase:

“Do you have a few minutes, so I can see how low a rate I can get you?”

Until next time.

Generating Good Faith Estimates (GFE’s) can be extremely time consuming, especially if done the wrong way. I remember when I was first starting out in the industry, it seemed like all I was doing all day was filling out GFE’s, and getting no where. When talking to a customer, it’s easy to say, “Hey, I’ll just send you a GFE, and you can look it over and tell me what you think”. But, this is the wrong way to approach things. Let me explain…here are a few tips to help you.

1. On the sales call, don’t ever offer to send a customer a Good Faith Estimate unless they specifically ask for one. What they will do is take your estimate and nit-pick with you over ever line item. Then they will compare you to everyone else’s GFE and you will LOSE. Yes. Lose. Because with all the sharks and charlatans out there, there will always be someone who will magically “beat your closing costs”. And, as we all know that much of the closing costs are not known at the initial time of the loan origination.

2. Instead, what you want to do is send out a “loan proposal”, which is something that they can review and includes all the payments, selling points, etc. about the loan. Are they consolidating debt? Taking cash out? Or have been previously renting? These are all things which you will want to cover and are motivating “hot buttons” that you can use to help them decide. In my business, I use excel templates that simply pop all my numbers in (also included in my system). Other loan proposal packages in the industry are The Mortgage Coach, and Loan Magic. These are the big expensive guys. I offer a simplified one in my system which does the same job without all the bells and whistles.

3. Of course, once the sale is made and you are proceeding ahead, go ahead and send the GFE. You’re legally obligated to (within 3 days of taking the 1003 application). If you are just chatting with the customer and have just done some initial pre-qualification work, you don’t have to. My loan closing system will help you get a pretty good idea of someone’s situation before taking a full 1003. In this business, time is money, so if you can save yourself from time-wasters, you’ve actually made yourself more profitable in the long run. You can learn more about my system at http://www.loanclosingsystem.com

4. If you do send a GFE to a customer before the loan has been completely SOLD, expect them not to call back…be shocked…confused…irate…or a whole host of other responses. Many of them, and even ones who have bought property before, have forgotten what a GFE looks like and all the fees that are included.

5. Along with every GFE, I send a pre-written template letter that has an explanation of many of the fees listed, and emphasizes that we “disclose all known fees upfront”, and have “no broker fee, no origination fee, no rate-lock fee, no application fee, etc. I include one of these templates in my Sink or Swim Loan Closing System you can easily modify and use as your own.

6. Always remember to follow-up immediately after sending the GFE. Make sure they have received it. It’s also a good excuse to give them a call back. Any reason to “hit” the customer again is a good one. For example, “Mr. Prospect, I know you asked for a GFE in order to help you decide on a mortgage. I just wanted to let you know that I emailed/faxed that over to you and was calling to make sure you have received it. Again we have no junk fees like others have, and I wanted you to see upfront that we are being honest in our assessment of the total fees on the loan. Of course as you know third-party fees may fluctuate slightly, but our fees will remain the same. Would you like to go over the Good Faith Estimate, line by line?”

7. Don’t include junk fees. Customers hate being charged for application fees, rate-lock fees, broker’s fees, doc prep fees, and unnecessary other fees. They will call you to the mat for these. Sometimes it’s good to put a little bit of padding in the fees, so you can take some of them off and be the “hero” to the customer. It all depends on the personality type of the customer. If you know they are a penny-pincher, throw in a few small fees, then agree to take them off as a gesture of good will. They will love you for it. :-) But hold your ground too and tell them that this is a special case and you expect that they will continue on in the process with you until closing. Sometimes, I tell them that I have to eat those fees taken off (this really gets them going).

8. Have GFE templates set up in Calyx Point, Genesis or whatever loan origination software you use. I simply click on the loan type (refinance or purchase), then loan terms and state, and all the information is input. I just have to tweak the variable fees by hand, such as title insurance and stamp taxes (if any). It takes me about 30 seconds to get a GFE out the door. I advise you to do the same. Refer to your product manual about how to do this or call technical support. Setting up templates is a powerful yet simple way to dramatically impact your business.

9. For combo loans, such as 80/20 etc. you will have to send two GFE’s, one for each loan (remember it is really two loans under one transaction). Most of the GFE fees will be absorbed by the first loan and the smaller second loan will just have a few smaller fees on it. Nothing much to worry about though, because it won’t send your closing costs skyrocketing. (Now, trying to sell an 80/20 combo loan to a customer is a whole other article!!! Lol!!!) Again, having ready-made templates will speed this process.

In conclusion, don’t waste your time sending Good Faith Estimates to people who won’t buy. Spend an extra minute or two upfront to gather the correct information and see if the deal is even a decent go-ahead or not. Develop your own method of determining this, or use my already built system at http://www.loanclosingsystem.com

The choice is yours, but the most important thing is to take action and modify what you are currently doing. Only by doing this will you become the top producer you deserve to be.

Best of luck in your business. This is a wonderful industry to be in!

One of the toughest things as a loan officer to do is to know when to keep or kill a deal. Of course, we all want as much business as we can handle. But, spending time on loans that don’t close, wastes more time and leaves you with nothing to show for it. Not to mention, the good deals suffer and you’re out your commission!

Knowing when to “give-up” on a loan is just as important as knowing how to get the loan to the closing table. Here are some suggestions on how to manage your customers and get more loans closed:

1. Keep control of the customer from day one. Set down your expectations for the loan process and what you expect from the customer. Tell them that this is a “team effort”, and you are working as diligently as possible to get them the best rate and terms available for their situation. But, in order to do this, you need their cooperation and commitment to move forward. Tell them what you need, and ask them on what day you can expect to receive things by. I like to pin people down to a specific day. They hold me accountable, and I, in-turn, am holding them accountable as well.

2. Build rapport early on. Get a sense of the customer’s personality and what matters to them. Understand completely what their reasons are for doing the loan, and use these “motivating factors” to help steer them through the process. Every time I speak with a customer, I again tell them why they are doing this and hit them with their “benefits” (cash-out, debt consolidation, monthly savings, lower rate, etc.). It is the customer’s point of view that is most important. (By the way, my system will help you to uncover the customer’s true motivation and build rapport—I include very specific questions to ask! Visit http://www.loanclosingsystem.com to learn more).

3. Explain every detail of the loan process. Sometimes, being in the industry, we forget that not everyone understands how mortgages work. It can be a long road to the closing table, and you want to make sure the customer understands exactly what is going to happen and when. You don’t want them to think that they can just cancel third-party appointments such as appraisers or surveyors without consequence!

4. Always assume the loan if moving forward. Customers like to make excuses and waffle on certain things like getting their documents to you. What I do, is always assume we are pressing ahead and on track. I am the driver of this bus and let the customer know it. For example, “Mr. Jones, I was just getting your file ready for underwriting, however, there are just a few more pieces of information we need. Do you have a pen and paper ready? How soon do you think we can get these by? O.K., I will expect to see your documents on (date). Let me give you my fax number, etc.”. Everyday, you want to push the file ahead as far as you can. Push! Push! Push!

5. Listen for signs of waffling or hesitation. Here are some things to be aware of, (which may mean the customer is still shopping you or is not completely “sold”): customer holds-back on getting income/asset documents to you, customer keeps putting off appraisal appointment, there are recent inquiries on their credit report from other mortgage companies, you have received negative feedback from the lawyer or any other third party, customer doesn’t return calls. These are signs of a customer that isn’t fully on-board.

If you’ve done all these things and are still having difficulty with the customer, then it’s probably a good idea to kill the deal. There are many roadblocks you can overcome, but when the customer isn’t fully committed, you shouldn’t be either. You can’t drag someone to the closing table that doesn’t want to be there. Get rid of the bad loan and focus on loans you can close successfully.

On every loan, there are a number of hurdles that must be overcome before the loan is “cleared to close” by the underwriter. One of the most important hurdles is the appraised value on the property. A deal can be dead on arrival, if the property comes in too low. A value can never be high enough (given the local market conditions), provided that there is comparable value to support it.

I’ve seen too many loan officers work so hard on a loan, only to have it fall apart when the report comes back. But, all is not lost! With my Sink or Swim training at http://www.loanclosingsystem.com and the things I tell loan officers to look out for, I’ve also seen deals come back to life!

Could you have saved your last dead deal? How much money did you lose in commission, because of a low appraisal? Follow these steps and your next deal will be a closer NOT a loser…

* Get the appraiser to go back out and re-evaluate the property. Did he overlook something? Did he do most of the report at his desk and spend little time out at the property? Was it a rushed job?

* Be sure to check the comparable properties listed on the report. Ask for additional comparables so you can make sure that the appraiser is valuing it properly.

* Ask your realtor contacts if any similar properties will be closing soon. You may be able to use these as comparables if need be.

* Will the bank allow a desk appraisal? If there is significant equity in the property, or the purchaser is putting a lot of money down, is there even a need for a full appraisal? What did automatic underwriting come back with? Will the bank accept a drive-by appraisal?

* Did you do your homework upfront first? Always be sure to check the property value on your own. A great site I use is domania.com. Also you’ll want to check the local tax assessors office to get a rough idea of property values in the area. Do this, and you’ll always be able to get a sense if the deal looks “iffy” or not.

* If it’s a purchase loan, you can still do the loan, but purchaser will have to make up the difference in down payment amount and pay for the additional “missing equity” with extra money down. Does the borrower have the funds to do this? Are they even that interested in the property to pay above “market value”? Don’t count this out! I’ve seen it happen!

* Will the seller lower the asking price? This can help make up the difference between the appraised value and the sales price.

* Can you get rid of any seller concessions, which may artificially have raised the purchase price of the home? Again, this will help lower the sales price and the shorten the gap.

* Is there still time before you submit the loan to have an new appraisal done by another company? If the original report had serious flaws, you may want to consider this. Keep in mind that all appraisers work within specific guidelines and one appraiser may not be any better than another.

Please, don’t give up too soon! Just when you think the deal is dead, it may come back to life. Follow my advice above, and you’ll be all the richer next time.

Every day I hear from loan officers across the country who are fed-up with low commissions and dwindling paychecks as the reality of the new mortgage economy sets in. They’ve had it and many can’t hold on much longer. Others take a more balanced view and decide to hanker down and weather the rough seas ahead by changing their approach.

Here are some things to keep in mind when you feel defeated and are ready to give up.

* With all things being equal, realize that what you are doing now isn’t working. And in order to survive you will need to modify your tactics. Keep doing what you’re doing and you’ll keep getting what you’re getting. Take a cold, hard look at your marketing efforts and decide now to change your approach. Consider new lead sources.

* Go after the customers that need you and stop chasing the customers that don’t. Refinance loans are done. Trying to save someone an 1/8 of a point on their interest rate isn’t worth the closing costs on the loan. The re-coup period of their upfront cash investment in the process can be 7 to 10 years or longer. Not to mention the volatility of the interest rates and their “savings” could go poof in an instant.

* Change your viewpoint. Know that however well you are doing, someone else is always doing better (this gives you something to strive for). And, no matter how bad you are doing, someone else is always doing worse (this shows how far you’ve come in your career). Knowing where you stand in relation to others helps you to put a stake in the ground.

* Try something new. The difference between success and failure is knowledge. Improve your sales skills by taking a mortgage training course or by using some of the sales tools that are currently out there. Although, I mostly train here in the northeast, there are many good mortgage trainers in all parts of the country who can help you. If you don’t have any money, you will want to consider some of the free sales training seminars put on by the larger wholesalers. These are often 1 to 2 day events packed with some of the best and biggest top producers in the mortgage industry. They give you a tremendous amount of sales and marketing information you can use immediately—and it’s all FREE!!! (By the way, my system at http://www.loanclosingsystem.com lists a lot of the free seminars, tools and resources available, including contact information).

* Decide how much longer you can stick things out. Having a definite end-game in mind, puts things into perspective. It also gives you “fight or flight” motivation. Often times when the stakes are high, people rise to the occasion and achieve new heights. Look at your cash reserves, review your expenses, then set a “must-achieve” goal for the month you’ll need to hit in order to survive. If you don’t hit that number and have little in the pipeline, decide then and there if a sales career is for you. Don’t wither on the vine and deplete your savings. If you don’t love your job, look for something else in the industry that is still mortgage related such as processor, appraiser or underwriter. Maybe that position would better suit you?

In closing, remember no matter what happens, know that nothing happens unless you MAKE IT HAPPEN.

Keeping up-to-date on everything going on in the mortgage industry can be a daunting task. With all of the coming changes from HUD and RESPSA, staying aware of rules and regulations is not only a necessity—it’s an absolute must! You do not want to risk a career you have worked so hard for!

Here are some of the best mortgage publications every insider reads. You should too! Not only is there plenty of information regarding RESPA’s new rules, but there are some great sales and marketing ideas. If you want to grow your business to the next level, make an investment and become a subscriber to each of them. Your bank account will thank you! ;-)

PUBLICATIONS:

Broker Magazine
A great magazine with an emphasis on sales and marketing tactics. The articles are detailed and well written. One magazine, I look forward to reading every month and my office is never without!
http://www.brokermagazine.com

Mortgage Banking Magazine
The official trade magazine of the Mortgage Bankers Association of America. Although geared more towards actual lenders than brokers, each issue contains a wealth of information. Especially if you are a mortgage broker who wants to someday transition to becoming a full-fledged lender.
http://www.mortgagebankingmagazine.com/

Mortgage Originator Magazine
One of the earliest industry publications, Mortgage Originator Magazine is considered to be the granddaddy of mortgage how-to advice. Their website has a great mortgage discussion board. Publishes the annual Top Originators List for the country. Only the very best can achieve this high honor (some day I’ll be there, and you will too!)
http://www.mortgageoriginator.com

Mortgage Press Newspaper
Publishes an individual mortgage newspaper for each state. Usually, it is also the official publication of the State’s mortgage industry association. One of the few publications that contains State specific information. Ask to be added to their mailing list. Sometimes they give away free subscriptions.
http://www.mortgagepress.com

Mortgage Technology News
One of the few industry publications dedicated to the technology aspects of the industry. Covers topics such as loan origination software, better pipeline management, and mortgage servicing. It’s what every IT Director in the mortgage industry reads.
http://www.mortgage-technology.com

National Mortgage News/Origination News Magazine
Another great publication with excellent “intelligence”. Has a great people and places section. I like to read this to keep up with the hiring and firing in the industry. It’s amazing how often people move around!
http://www.nationalmortgagenews.com

Scotsman Guide
Confused by the thousands of loan programs out there? Get the Scotsman Guide. This is one of the few publications I rely on daily to help place those difficult loans. Has loan matrixes and underwriting guidelines. This one magazine alone will save you hours of hunting around. Close one loan with it, and you’ve paid for the equivalent of a 15-20 year subscription!!!
http://www.scotsmanguide.com


ONLINE-ONLY PUBLICATIONS:

Loan Officer Magazine
A great website put together by Karen Deis, an industry veteran. I have a lot of respect for her and her work. Some interesting ideas can be found on her site.
http://www.loanofficermagazine.com

Mortgage Media Mag
More of an industry directory. Has thousands of links to other mortgage sites, including net branch, and companies who hire at home loan officers. Also, has a free monthly mortgage newsletter with the latest happenings.
http://www.mortgagemag.com

Top Producer Strategies
Tips from some of the top producers in the industry! All free! You can’t beat that price!!! Sign up for the monthly newsletter. This is high quality stuff!
http://www.topproducerstrategies.com

Information truly is power, and I want us all to benefit from each other’s knowledge.

One of the most frequent questions I get asked from loan officers is, “How can I go out on my own and start my own mortgage company?” Often times, the person is sick and tired of low-commissions, office politics, too restrictive a time-schedule, etc. There are hundreds of reasons why they want to get out.

They see the money other loan officers are making, and wonder why they aren’t making that kind of money too? After all, they are doing the SAME work. The difference, very often, is just in the commission payout. Branching out on your own, is an instant pay-raise and can often double or triple the amount of commission you are currently earning.

There are two ways to start your own mortgage business.

1. Get your own broker license from the State.

2. Join an existing regional or national company as a “net branch”.

There are advantages and disadvantages of each. First off, getting your own license from the State isn’t easy. There are certain financial and experience thresholds that regulators look for before granting a broker’s license. Also, the capital requirements and start-up costs make this option extremely cost prohibitive. And, you’d be responsible not just for bringing in business and selling loans, but also hiring a processor, doing all the accounting and back office tasks, auditing, renting office space, etc.

Not to mention, that you have to go and set-up relationships with each lender you want to do business with. And some of them are pretty picky about who they deal with. If you’re a one-person company, you can forget about incentives and low pricing. You’re simply not worth their time.

By going entirely on your own, you can see quickly that your time would be exhausted with “chores”, leaving little available time to sell loans—unless you plan on working around the clock! And how long would a mortgage company last without new business?

But, getting your own license would give you 100% commission. Isn’t that what you want? 100%?

Another option is join an existing net branch company. Net branches are very popular in the industry and give you a number of advantages over going it alone.

A net branch is simply of way of doing business. You create your own personal branch, but under and existing mortgage company. You have freedom to do what you want and have all the benefits of being a large corporation.

Firstly, when you join a net branch, you are joining a ready-made structure with back-office support in place. That means they handle all the auditing, the compliance checks, the follow-up etc. Some even do processing. For this, they take part of the commission. So, instead of 100% (from going solo), you might just get 70% to 80%. Not bad, considering what you are earning currently. And you don’t have all the other regulatory headaches to contend with.

Net branches are typically 1 to 2 person shops, mostly professionals operating from their own home office, and selling on the road. In today’s digital age, this is entirely possible as most work is submitted electronically, or done over the phone and fax. Location is irrelevant.

By freeing-up your time--not getting bogged-down in the details--you can focus on bringing in new business and earning more money.

Remember, each net branch is different, and each has their own set of processing rules, guidelines, commission splits, fees, etc., and all should be examined closely before making a final decision.

Whether you decide to get your own brokers license or join a net branch is up to you, it depends on what your long-term goals are. Some people want 100% control over their destiny and want to create something new. That’s fine. That’s how entrepreneurs succeed. But, others don’t want the hassle of starting an entirely new business—they just want a higher paycheck to reach their goals.

When I was a branch manager, there were always certain traits and skills I looked for before deciding to hire someone. After years of experience, and learning things the hard way, I know what it takes to be successful. Not everyone is cut out to be a loan officer. The mortgage business is like no other, and it takes a certain type of person to be successful in this industry.

Here are some of the top traits and skills I believe every loan officer must have in order to be successful.

If you want to become a top producer…

1. You need to like the mortgage lifestyle. It needs to be more than just a “job” for you in order to put up with the demands on your time, life and family.

2. You need to be a motivated self-starter. You will either succeed or fail almost entirely based on your own individual efforts and no one else’s. If you are afraid to take the initiative, maybe this isn’t the right career for you.

3. You need to be a hard-worker and be willing to go the extra mile. Selling and closing a mortgage loan is NOT easy work or fast money.

4. You need to be smart worker. You are paid for results, not the amount of hours you put in. Organization, efficiency and productivity are the key words in this business. And a loan officer is only as good as his last loan. If you don’t systematize your business and outsource non-essential tasks, your time will be quickly eaten-up, making you less effective. Hence the reason why I invented my worksheets at http://www.loanclosingsystem.com

5. You need to enjoy solving "people’s problems". As the refinance boom and the easy loans have dried-up, you need to look at other ways you can originate business. Creative financing and thinking outside the box, will get you loans that others leave behind. Interest-only loans, debt consolidation, cash-out divorce loans, reverse mortgages, etc. are all alternative loans you need to be considering if you are to stay in this business for the long term.

6. You must have people skills and be able to interact with customers from all walks of life and economic situations.

7. You must be a good listener. The more you “hear” the customer, the less pushy “selling” you will have to do. Find out what is truly motivating them and offer them something that truly solves their problem, you’ll be more likely to get the sale.

8. You need to be emotionally stable and mature. You can’t play games or mess around with people’s financial situations if you are to maintain the trust and confidence of the other person. You also need to maintain your own sense of balance and fairness.

9. You need to know your product line inside and out. Knowing one lender is not enough, you must know at least 15 to 20 lenders, from A-paper to B-paper and beyond. How else are you going to be able to sell a customer something if you don’t know what you’re selling?

10. You need to be convinced of your product’s value. It should be easy to be enthusiastic about your product when you know you are truly helping somebody.

11. You need to be flexible and agile. The mortgage industry changes everyday in technology as well as fundamental ways of doing business. You must be willing to adapt to whatever is thrown at you.

12. You must be a constant learner. Even after many years originating loans, I still learn something new everyday. That’s why I love the industry so much! It’s an on-going education.

13. You have to persevere and never, ever give-up! Relentless perseverance is the only way you will succeed. When something doesn’t work, try doing something else! You can’t take rejection personally. If someone says “no”, it doesn’t mean they don’t like you. After all, they don’t even know you.

These are the traits and skills I teach my loan officers, and I would encourage you to print out this list and look for it before you decide to hire someone else. Remember, by emulating the qualities of top producers, you are more likely to become a top producer yourself.

What sets one loan officer apart from another? And how do some people become “top producers” in their office, while others slowly squeak by? Surely, we all have the same amount of time, resources, and intelligence (debatable?!) available to us.

So why do some loan officers fail, while others succeed? Here are some points to remember which will help ensure your success…

Take control. Stay on top of things and be sure monitor your loans as they progress on their way to the closing table. Always be aware of what stage a file is in during process. Don’t trust anyone else with your commission check. Stay aware of any problems that arise, and work with your processor to fix them. If you can help speed things up, please do—but not at the expense of making new sales!

In my office, Nancy and I have a communications system in place (namely, my mortgage closing system). I religiously write down every detail of a file and go far beyond just the 1003. Questions I ask include:

“When are your taxes due?” (Useful for estimating accurate escrows).

“Will you both be available to sign closing documents in the next 30 days?” (Useful for scheduling purposes, I want to know ahead of time if any vacations or expected trips are planned).

“Do you need a set amount of money as cash-out at the closing table or will you take whatever is left over?” (Customers don’t understand that escrows can change, and they might be expecting a higher amount as cash-out than they actually receive).

And of course, the catchall question: “Is there anything else, financially, legally or otherwise, that I should know about that may affect your loan?” (Use this to disarm any landmines that may pop-up).

Remember to always put the customers needs first, ahead of yours. Empathize with the customer and let them know how hard you will work for them. Gain their trust early on, and the amount of referrals you will receive will be immeasurable.

Never let a detail slip by. Remember to ask all the important questions upfront. And, always, always, always, fill out the 1003 loan application completely and fully! There are no shortcuts to success.

Learn everything you can from the other, more experienced loan officers in your company and don’t be afraid to ask questions. I always ask my wholesale reps, attorneys, and appraisers questions. I want to know as much as I can about every facet of this business. And I know, that with each day as my knowledge increases, my job becomes easier, and the more sales I will make. You will too!

Never repeat the same mistake twice. When something goes wrong on a loan, ask yourself “Why?”, then try to brainstorm ways to tackle this hurdle so it doesn’t happen again. No loan closes as quickly as you think it will. By ironing out as many bumps as you can, it makes your next loan that much more streamlined and straightforward.

At the end of every loan we close, Nancy and I make a list of what went right, what went wrong, and why. We write down how we can improve the process and make things better. Taking 5 minutes after the closing to do this will pay many dividends to you in the future.

Stay focused on why you are in this business. Is it to help people? Do you enjoy the daily challenge of earning your own income? What is it that drives you to be successful? What goals do you have? What is your long-term plan?

For me, when I first started out, I was only earning about 10% commission on every loan I closed. That’s right, a measly, 10% on each one! Peanuts, you say??!!! But, I had a plan…and I knew that once I learned the mortgage business from the inside, I could move on to bigger and better things. (Not to mention, fatter commission checks!).

I sacrificed two years of my life to learn the ropes, with the prospect of earning, much, much, more in the future. Isn’t that what people do when they go to college? (I did that too, by the way!).

Remember this, no matter what your current firm is paying you now, there is always another mortgage company out there that will PAY YOU MORE! Do an online search for “mortgage net branch”, and you will find dozens of companies that will double or even triple your current commission check. Good sales people are hard-to-find and are always in demand. If you leave one job, don’t worry. You can easily find another. But, make sure you leave on your own terms--and more importantly--at a time of your choosing.

These are just a few of the things that I have helped me become successful. I know that when I hand a borrower’s file over to Nancy, she will take excellent care of the loan. And because I do my job as a loan officer as thoroughly as I can (by filling out everything on my worksheets), it makes her job that much easier.

As you can see, there are many different ways to become successful in this industry. Believe in yourself and what you are doing; put the customer’s needs first and ask the important questions upfront; and stay focused on what you want to get out of your business. If you only did these three things alone, you’d go far as a loan officer! Now go get ‘em!

A current account mortgage is a type of flexible mortgage product that combines several financial products into one single account. As with any other mortgage product, a current account mortgage will be secured against the borrower’s home. This type of home loan product cannot usually be secured against investment properties.

The main difference between a current account mortgage and a standard mortgage product is that this type of home loan will act as both the borrower’s home loan and current account. That is why these mortgages are often referred to as a “line of credit”. The borrower will normally be required to have their salary or wage paid directly into the current account mortgage and will be allowed to withdraw money from the line of credit as required – within a pre-determined upper limit.

In addition to combining the mortgage with a current account, it can also be combined with credit cards, personal loans, and cheque book facilities in order to streamline the borrower’s overall banking facilities into one product. As well as helping to streamline the borrower’s banking facilities, a current account mortgage can offer flexible features that standard mortgage products do not, which can further assist the borrower with managing their personal finances.

Because a current account mortgage is a type of flexible mortgage it can offer features such as overpayments, underpayments, drawdown of overpayments previously made, additional borrowing facilities, no (or low) redemption penalties.

In addition to flexibility, a current account mortgage can help the borrower save interest and pay off their home sooner. This is due to a combination of factors such as earnings being paid directly into the mortgage, daily interest rate calculations, and no high interest loans (e.g. credit cards) to pay off simultaneously. A current account mortgage can, therefore, provide a borrower with many features for organising their personal finances and paying off their mortgage as soon as possible.

However, despite the benefits, it is important for the borrower to remain disciplined because excessive withdrawals will increase the overall cost and term of the mortgage and negate the benefits offered. It can be tempting to withdraw money previously paid off the balance of the mortgage to fund personal expenses such as furniture and holidays. Holders of current account mortgages need to be vigilant and curb their unnecessary spending if they are to pay off the entire balance of their home loan within an acceptable time frame.

Because of this, careful consideration should be given before applying for a current account mortgage. Professional advice should be sought from an independent mortgage adviser who can provide advice on the entire mortgage market in the UK. An independent adviser will be able to assess whether a current account mortgage is right for you and, if so, which products and lenders to consider applying to.

In order to receive the best advice it will be necessary to contact an independent adviser rather than a tied adviser. A tied adviser will only be able to provide advice and information on a select range of products from a limited number of lenders. An independent adviser will be able to provide unbiased advice on the whole of the UK mortgage market.

The latest trend in the mortgage market has been an increase in the number of borrowers taking out a 100% loan-to-value mortgage. This means that the loan-to-value ratio of the mortgage is 100% rather than the 85% or less normally attached to more traditional mortgage products.

A 100% mortgage can be used to fund the entire cost of purchasing a property, eliminating the need for a deposit. The only costs that are not covered are one-off expenses such as stamp duty, legal fees, and mortgage application and brokerage fees.

Some cash poor borrowers are even opting for mortgages with an even high loan-to-value ratio, such as 125% mortgages, in order to pay for all of the expenses incurred upon purchasing a property in addition to the cost of the property itself. This is beneficial to property buyers who do not have the funds required to pay for these expenses themselves.

While there are obvious benefits to a 100% mortgage, there are also disadvantages.

The biggest disadvantage is that any fall in the value of the property purchased will result in instant negative equity. This can cause problems if the borrower wishes to sell their property because they may not recoup enough money from the sale to pay back the entire loan balance. If this occurs the borrower may be left with no property and a small mortgage balance to finish paying off.

Negative equity can also make it virtually impossible to remortgage. Lenders will be reluctant to finance a property which has a mortgage balance higher than the open market value of the property. Borrowers should therefore attempt to pay off some of the balance of their home loan if they apply for a 100% mortgage.

In addition to negative equity, 100% mortgages have other disadvantages such as hefty fees and high interest rates. These extra costs provide a hedge against the extra risks faced by the lenders if the borrowers cannot keep up with their monthly mortgage payments.

Despite the disadvantages, lenders previously appeared to be keen to offer a variety of products, such as the 100% mortgage, that are aimed at helping people who have little or no savings take a first step onto the property ladder. In fact there were more than one hundred and fifty 100% mortgage products on offer from various UK lenders, and the number of applicants had doubled in recent times.

This was good news for borrowers as the high volume of lenders to choose from made the market more competitive. However because of the recent credit crunch in the USA the number of high loan-to-value products available on the UK market has begun to decline. Lenders are tightening their belts now that property prices have stabilised and 100% mortgage products are no longer a widely available as they were several years ago.

They have no disappeared from the market completely, however, meaning that there are some products still available to borrowers that lenders perceive as being low risk. Once the effects of the credit crunch soften the market for 100% loan-to-value mortgages should bounce back.

In this day and age of low housing affordability, it is more difficult than ever for first-time-buyers to secure their first home. A shortage of housing stock has lead to a situation in which demand for housing far outweighs supply and this has, in turn, driven prices up and affordability down.

Because of this, many first-time-buyers no longer qualify for standard mortgage products even if they are in full-time, steady employment. Lenders have therefore been forced to invent specialized mortgages that are designed to help people take their first step onto the property ladder.

First-time-buyer mortgages are not a product of their own, but rather comprise a small set of products that are aimed at the first home buyer market. They include shared ownership, guarantor, no-deposit, key worker, and standard mortgage products that are only available to people who do not yet have their own home.

Shared ownership mortgages are fast becoming the most popular vehicle for first-time-buyer to buy their first property with. Shared ownership products allow people to purchase part of a property and rent out the other part, which is owned by the seller – usually a property developer. Over time, the buyer will purchase the remainder of the property from the developer one portion at a time.

A no-deposit mortgage is another product available to some first-time-buyers that is usually targeted towards individuals who have a steady income but who do not have enough savings to pay for a deposit. This type of first-time-buyer mortgage products is normally issued with 100% loan-to-value ratios.

Guarantor mortgages are simply home loan products for which a person signs up as a guarantor over the debt if the mortgagor fails to keep up with their repayments. Anyone who passes a lender’s lending criteria can become a guarantor although they are typically parents of borrowers who are helping their children get a foot on the property ladder.

Key worker mortgages are made available to workers such as nurses and teachers. They are designed to encourage key workers to buy properties close to their places of work.

Exactly which first-time-buyer mortgages are suitable for you will depend on the circumstances under which you are buying the property as well as your personal financial situation. A careful assessment of your personal circumstances may be required by an independent mortgage advisor in order to ensure that you select the right product for your situation.

It should also be noted that the property market is always changing and with affordability continuing to decline lenders are constantly assessing the needs of first-time-buyers. Because the first-time-buyer market is so important to lenders, they are constantly working hard to ensure they bring new and innovative mortgages to the market which can help them get a foot on the property ladder.

This is all the more reason to contact an independent mortgage advisor for an unbiased assessment of your borrowing needs and personal financial situation. Independent mortgage advisors have access to the entire home loan market and should be able to help you select the most appropriate product to suit your needs.

Shared ownership mortgages are specialist mortgages that are designed to cater for purchasing property through shared ownership schemes. Shared ownership schemes are also known as shared equity schemes and have become a popular method for first-time-buyers to get a foot on the property ladder if they do not have the funds necessary to pay for the deposit required for more traditional mortgage products.

At present there are only a few lenders who offer shared ownership mortgages, however, the list is growing. Even the Government has showed interest in becoming involved in shared ownership schemes in the wake of increasing property prices and low home affordability.

A shared ownership scheme allows a property buyer to purchase part of a property and rent the remainder from the property developer. This means that the developer and the property buyer jointly own the property. The buyer can fund the purchase of the portion of the property they purchase with shared ownership mortgages and therefore get a foot onto the property ladder without having to pay for a cash deposit.

As time goes by, the buyer can purchase additional portions of the property until such time as they own it outright. Shared ownership mortgages can assist the buyer in funding the purchase of the additional portions of the property. The amount of money that is required to purchase the additional portions of the property will be assessed on the market value of the property at the time. This means that as property prices rise, the amount of money that will be required to fund the additional purchased will also rise.

Any repairs and maintenance on the property will most likely be required to be funded by the occupant, regardless of the fact that the property developer will still own part of the property. Shared ownership mortgages are usually only available to applicants who are in full-time permanent employment and who have a clean credit history.

The target market for shared ownership mortgages is hard working individuals who are good candidates for keeping up with the repayments on the mortgage but who may not have the means to save enough cash for a deposit. Potential applicants who have an intermittent working pattern or who suffer from adverse credit may not be successful in securing shared ownership mortgages.

There are, however, more and more shared ownership mortgage products entering the market as property prices continue to rise and home ownership becomes less affordable to first-time-buyers. This may mean that potential applicants with intermittent working patterns or light adverse credit files may soon be eligible to apply for such home loan products.

Independent mortgage advisors are able to advise individuals as to whether they qualify for shared ownership mortgages and whether they are the right product to consider in the first place. Some first-time-buyer applicants may be better suited to other types for home loans such as guarantor mortgages or home loans with high loan-to-value ratios that do not require a deposit. Independent mortgage advisors should be able to advise which products are the most suitable for borrowers.

While most mortgage brokers need to be registered with the Financial Services Authority in order to advise clients on residential mortgages, no such rule exists for buy-to-let mortgages. This is because buy-to-let mortgages are regarded as commercial loans and the Financial Services Authority does not regulate this type of finance.

Regardless of the fact that a mortgage broker does not need to be registered to advise on buy-to-let mortgages, if you are applying for a buy-to-let mortgage you may find that your mortgage broker is registered with the Financial Services Authority anyway because they also broker residential mortgages.

Because of the different rules, a mortgage broker does not need to follow the same processes for buy-to-let mortgage applications as they do for residential mortgages. The Financial Services Authority has not, as yet, issued a set of strict rules and regulations to follow for this type of mortgage.

However, this does not mean that you will receive inferior service for your investment mortgage applications. Most mortgage brokers treat all mortgage applications with the utmost care and expertise whether you are applying for a residential or commercial mortgage.

Some lenders will also only deal with mortgage brokers who are registered with and regulated by the Financial Services Authority to ensure that their customers are receiving the most professional advice possible. Therefore it can be beneficial for a mortgage broker to register with the Financial Services Authority even if they only deal with buy-to-let lending. The more lenders a mortgage broker can deal with – the better they will be able to advise their clients.

While the rules for residential mortgages do not presently cover investment mortgages, it is possible that within the next few years the Financial Services Authority will extend their powers to include the policing of buy-to-let mortgages. If that is to be the case then mortgage brokers who are currently unregistered but who deal with buy-to-let mortgages will most likely need to be registered with the industry regulator.

However, it is a tricky situation to regulate buy-to-let mortgages in the same way as residential mortgages and the Financial Services Authority has yet to find a way to do it. If they regulate buy-to-let mortgages they will also need to regulate other commercial mortgages. This is a situation that mortgage brokers and the Financial Services Authority do not want to occur.

Regulating the buy-to-let industry is a topic that has gained exposure in the press in recent years. This is perhaps because of a growing opinion that people who invest in property should be protected from unscrupulous operators in the industry. This not only includes mortgage brokers, but also individuals and companies who run buy-to-let investment seminars and people who source properties and sell them to investors.

The Financial Services Authority has shown interest in regulating more of the buy-to-let industry which may mean that buy-to-let mortgages may one day fall under the scope of their mortgage industry regulations. It may be tricky, however, to develop regulation for buy-to-let mortgages while not regulating finance for non-residential commercial properties.

The mortgage intermediary market is facing a potential recruitment crisis due to a lack of graduate mortgage brokers entering the industry. Unlike many other professions, such as accounting or banking, the mortgage industry does not have a structured recruitment process designed to attract new mortgage brokers.

At present, the industry is awash with mortgage brokers in their 40s or 50s who are nearing retirement and who have little interest in applying new directives from the Financial Services Authority or learning about new advancements in IT. Because of this, the mortgage intermediary industry is hungry for new talent to take their place.

Trainee mortgage brokers are required to complete a qualification such as the Cemap, but this is only necessary after they have decided to enter the industry. Once trainee mortgage brokers have completed the Cemap there is virtually no compulsory ongoing training required to continue working as a mortgage broker.

The ongoing training does exist, however it depends on the employer as to how much training their mortgage brokers will be required to complete in order to remain authorised. Despite this, training is not the issue. What the industry needs is a graduate program that will attract young and enthusiastic individuals in the first place and convince them to become mortgage brokers.

Industries such as accounting and law have graduate programs and recruitment drives that target students as early as high school to get them interested in working in their respective industries. The financial services industry, however, lacks such programs so most people who enter the industry do so after working in other fields.

Despite this, working as a mortgage broker can be a rewarding career with each day different from the last. Mortgage cases are rarely similar to each other these days as individuals are subjected to a wide range of salary and wage schemes from their jobs. Credit files also vary considerably between mortgage applicants and heavy adverse credit individuals can present mortgage brokers with challenging situations.

The buy-to-let industry has also grown considerably since the mid 1990s presenting mortgage brokers with the opportunity to arrange finance for investments as well as residential properties. Investing in overseas property has also grown in popularity recently and some mortgage brokers now offer services for this market.

As with all industries that experience skills shortages, mortgage brokers have the potential to earn excellent salaries and substantial commission payments. Remuneration levels vary with fully independent mortgage brokers working in a self-employment situation likely to earn more than their employed counterparts. This will mean, however, that they will need to have an existing client base because they will not be remunerated unless they arrange mortgages for their clients.

There are not only exceptional financial rewards on offer for mortgage brokers that are willing to put in the hard work, there are also intrinsic rewards such as helping people, for example, buy their first home.

If you are interested in becoming a mortgage broker contact the Chartered Insurance Institute (CII) or the Institute of Financial Services (IFS) to find out more about the qualifications on offer.

Prior to 2004 there was little regulation for mortgage brokers conducting business in the UK. Anybody could call themselves a mortgage broker, regardless of whether or not they held the necessary qualifications, and they could source clients and conduct their businesses in any way they chose to.

However the Financial Services Authority introduced a strict regime of regulation on 31 October 2004. Mortgage brokers were forced to obtain industry approved qualifications and conduct their business in accordance with the FSA’s rules and regulations.

One rule that was introduced on that date eliminated the ability of mortgage brokers to source clients through cold calling. Cold calling involves phoning people at random without any prior consent given by the individuals. It is a technique that was used by many mortgage brokers to find new customers prior to the new rules coming into effect.

This meant that mortgage brokers who relied on cold calling to expand their customer base were forced to invent new ways of finding clients. Because of this, lead generation companies began to emerge that generate leads for mortgage brokers who do not have the ability to do it themselves.

The lead generation companies are mostly internet based and gather leads through websites. This type of business activity is mostly unregulated by the FSA as it is not the mortgage brokers themselves who are gathering the leads. Some rules do exist for lead generators including that they are required to advise visitors to their websites that they will be contacted by an independent mortgage broker. The leads must then be sold to an independent broker rather than a tied advisor.

Despite this, lead generation is not considered to be cold calling and would therefore not endure the wrath of the industry regulator with regards to the ban on this activity. Generating leads with the purpose of calling back the clients would be considered a “warm lead” rather than cold calling.

However, mortgage brokers and the general public should be aware that a minority of lead generation companies have used unscrupulous means to obtain data for potential mortgage customers and have sold it to mortgage brokers disguised as qualified leads. If you receive a phone call from a mortgage broker and you did not submit your details online for this purpose you should contact the authorities.

Mortgage brokers who buy such leads will then call the potential clients only to find that the leads are not genuine. This means that the mortgage broker has effectively made a cold call to that member of the public because they have not given prior approval for the mortgage broker to contact them. This is a potentially dangerous situation for a mortgage broker to find themselves in so all efforts should be made to stamp out this practise.

Mortgage brokers should be careful to ensure that any mortgage leads they purchase are genuine. There are several large lead resellers operating in the UK who have excellent methods for filtering out invalid leads. High quality lead resellers will also offer mortgage brokers refunds on all invalid leads.

When searching for a home loan, you will be faced with the decision of whether or not to use a mortgage broker. There are advantages and disadvantages to using a mortgage broker instead of applying for a home loan directly with a lender.

One of the main advantages is that independent mortgage brokers have access to, and knowledge of, the entire UK mortgage market. Mortgage brokers are able to advise which lenders will consider your case and which lenders and products are unsuitable based on your individual circumstances.

Mortgage brokers are also adept at sourcing mortgages for people with poor credit ratings. They will have access to many lenders who specialize in lending to people with adverse credit. If you are in this situation, you may find it futile to apply for a mortgage directly through a mainstream bank.

Another advantage of using a mortgage broker is that they will take care of a lot of the paperwork and chasing up of the lender for you. This can save you precious time and reduce stress. Mortgage brokers will often have points of contact with the various lenders they put business through. This can help improve the efficiency with which your mortgage case is dealt with.

Mortgage brokers can also have access to exclusive deals not available on the open market. This is a major advantage of using a mortgage broker as exclusive deals can be quite favorable to the borrower. Sometimes mortgage brokers are able to negotiate a better interest rate or lower application fees from the lender. This is rare, but it is not unheard of, particularly where a broker has a strong relationship with a particular lender.

While there are many advantages to using a mortgage broker, there are some disadvantages.

One of these includes the tendency for some unscrupulous brokers to show bias towards lenders that provide them with higher fees and commissions instead of recommending the most appropriate product for the borrower. Although they are not supposed to, the temptation to earn extra commissions can be too much for some brokers.

Also, the broker may not be as highly trained and experienced as you are lead to believe. While there are exam and training requirements, some mortgage brokers are simply not very good at their job. Additionally, not all brokers have access to a full panel of lenders, meaning that they may not be able to source mortgages from the entire market. These brokers are usually referred to as “tied advisors” and will need to make you aware of their status before conducting business with their clients.

Finally, some brokers charge hefty fees to their clients, particularly for difficult cases, usually relating to adverse credit. The fees can be costly and may be a deterrent to using a mortgage broker. Some brokers charge up to five percent of the balance of the loan as a fee for heavy adverse customers.

Whether or not to employ the services of a mortgage broker is a matter of personal preference and necessity.

Independent mortgage brokers are generally regarded as an excellent source of advice when searching for the right mortgage to finance or remortgage a property. Independent mortgage brokers are not tied to advising clients to use particular lenders and home loan products. Instead, they have access to all mortgage lenders and products available on the market.

In addition to independent mortgage brokers, there are tied mortgage brokers. Tied brokers are similar to independent brokers however, instead of having access to all mortgages available on the market they only have access to products from a select panel of lenders.

Mortgage brokers who work within a bank or financial institution are generally known as mortgage advisors. This type of broker will only offer advice on the home loan products made available by the institution they work for. Mortgage advisors therefore offer advice on the most limited range of products out of the three different types of brokers.

Some mortgage brokers, however, do not offer independent or tied advice and therefore provide an “information only” service. Information only mortgage brokers do not help their customers decide upon which mortgage products are best suited to their individual circumstances or financial situation.

Instead, information only brokers will usually offer a wide selection of mortgage products and will perform the administration functions required to process the application after the customers have chosen the products by themselves.

While this may seem strange at first, the main advantage to the customer of such a service is that the customers are normally not charged a fee. Customers can therefore benefit from using information only mortgage brokers by saving money.

The main disadvantage, however, is that the customer may not select the most appropriate mortgage product for their individual situation. This can result in the customer paying more in interest and fees over the life of the loan than they would for a more suitable product.

Individuals who wish to use information only mortgage brokers should therefore have a good knowledge of the mortgage market in order to ensure they choose the right products for their individual needs. If they do not then they should consider paying for advice from an experienced broker.

Additionally, mortgage brokers sometimes have access to products that are not available on the open market. These are known as “exclusive deals” and each of these deals will normally only be available to the clients of a few selected mortgage brokers. Customers who use information only brokers may therefore miss out on such mortgage products.

In all, when deciding whether to use information only mortgage brokers, people must decide whether they need independent advice, whether they wish to have access to the entire mortgage market, whether cost is a factor, and whether they want to risk not being made aware of exclusive deals.

If cost is not important and people believe they can choose the right mortgages without independent advice, they may wish to use the services of information only mortgage brokers. There are several thousand brokers in the UK to choose from.

When looking for a mortgage you may be faced with a decision as to whether you should use the services of a mortgage broker instead of applying for a home loan directly with a lender.

One of the main reasons why you should use a mortgage broker is that they have access to a much wider range of products than an individual lender does. Mortgage advisors who work within bank branches are tied to the products that the bank offers and cannot advise on products offered by other financial institutions. This means that tied advisors are not able to offer advice on the entire mortgage market and are therefore not independent and unbiased.

Instead those mortgage brokers are usually limited to about a dozen products, usually with varying interest rates, loan-to-value ratios, and fees. Apart from the variances in these factors, the products are mostly the same.

They will usually require the applicant to pass the same set of criteria, such as credit worthiness, in order to assess whether they are eligible for a loan. This normally means that applicants with adverse credit will not be approved and the lender will not assist them in locating a more suitable product.

Independent mortgage brokers, on the other hand, may have access to thousands of products from dozens of different lenders. This will certainly increase the odds of you finding a product to suit your individual circumstances, particularly if you are self-employed or do not have a perfect credit history.

An independent mortgage broker will have access to software that will be able to scour the entire UK mortgage market to find the best product available to suit your individual needs.

Many niche lenders specialize in providing mortgages for people who do not qualify for the products offered by mainstream lenders and they usually prefer to conduct their business through independent mortgage brokers. This means that you will not be able to access certain lenders without using the services of a mortgage broker.

Some larger mortgage brokers are even able to offer exclusive and semi-exclusive deals. These mortgages are not available on the open market which means it is always a good idea to contact at least one major mortgage broker to find out what they have to offer. Exclusive deals are usually only available for a limited time and target certain borrowers.

However if you are eligible for a prime mortgage product you may be able to secure the best deal directly from a lender. If you apply for a mortgage with a mainstream lender you will be able to save on mortgage broker fees as you will effectively cut out the middle man. Ordinarily you will be required to have a perfect credit file and some equity in your home or a large deposit.

Therefore, if you are looking to buy a home and need a mortgage, or if you are looking to remortgage a property you already own, you will need to asses the two options carefully and make a decision based upon your personal financial needs.

There are several different types of methods for interest to be charged on mortgages. Tracker mortgages have a variable interest rate that moves roughly in line with the Bank of England Base Rate (BoEBR). Another popular type of interest rate is a fixed rate which does not move in line with the base rate.

The interest rates on tracker rate mortgages are quoted as a fixed percentage above the base rate and will normally exist for a short period, although it can be attached to the tracker rate mortgage for its entire term. The opposite of a tracker rate mortgage is a fixed rate mortgage. The interest rate on this type of product does not move in line with an index and instead remains stagnant for a fixed period of time.

Once the tracker period expires the interest rate will convert to the lender’s Standard Variable Rate (SVR). A typical example would be a tracker rate mortgage that has an interest rate of BoEBR+2% for three years. Once the three period expires the interest rate will revert to the lender’s SVR for the remainder of the term of the home loan.

The BoEBR is set by the Bank of England Monetary Policy Committee (MPC) each month. The MPC will evaluate a range of economic indicators to decide whether a change in the base rate is necessary to meet the Government’s inflationary policies.

Because the interest rates attached to tracker mortgages are attached to the BoEBR, any movement will affect borrowers’ monthly repayments. Upward movements in the BoEBR are usually passed onto borrowers within a few days and downward movements within a month.

Tracker rate mortgages therefore come with an inbuilt risk factor that borrowers must assess carefully. If a borrower cannot afford to continue making payments on tracker rate mortgages if the interest rate increases significantly over time, they may need to reconsider applying for this type of mortgage product.

Borrowers who do not want to be exposed to such fluctuations should consider applying for fixed rate mortgages instead of tracker rate mortgages. Fixed rate mortgage have interest rates that do not move each time the base rate is increased or decreased and therefore offer the borrower security.

However, if the base rate falls, borrowers of fixed rate mortgages will not be able to take advantage of the cheaper cost of borrowing. The interest rates on tracker rate mortgages will decline and borrowers of this type of product will subsequently save money. Borrowers will therefore need to make a choice as to which type of product to apply for based on their attitude to the risks involved.

If you are unsure whether tracker rate mortgages are right for you, contact an independent mortgage adviser for expert and impartial advice. An independent advisor will be able to assess your mortgage needs based on your personal financial situation. Once they help you decide whether a tracker rate mortgage is for you they can utilise their special software to scan the entire UK mortgage market to find the right product for you.

A capped rate mortgage has an interest rate that cannot rise above a pre-determined level for a specified period of time. After the capped rate period expires, the interest rate of the mortgage reverts to the lender’s Standard Variable Rate (SVR).

A cap and collar mortgage is similar to a capped rate mortgage except that is also has a lower limit, beneath which the interest rate cannot fall over a specified period of time. The upper limit is called the “cap” and the lower limit is called the “collar.”

For example, if a borrower applies for a cap and collar mortgage with a cap of 7% and a collar of 5% and a cap and collar period of two years, the interest will move between 5% and 7% during that period of time. If the lender’s SVR rises above 7%, or falls below 5%, the interest rate on the cap and collar mortgage product will remain within this band.

A cap and collar mortgage provides the same hedge against future interest rate rises that a capped mortgage does, however, it will remove the benefit of being able to take advantage of future decreases in the lender’s SVR.

This means that the lender will be more certain of the amount of interest it will be able to collect from the borrower during the cap and collar period. Because of this, the overall risk of the mortgage is reduced, and the lender can issue the cap and collar mortgage product with a slightly lower interest rate than a capped mortgage product without the collar attached.

A capped mortgage – with or without a collar attached – is a useful option for borrowers who wish to protect themselves against future interest rate rises. Capped mortgage products are at their most popular during periods of low interest rates that are predicted to end within the near future.

Capped mortgages are particularly useful for households with a tight budget such as those for first time home buyers and young families. The cap will help ensure that the monthly mortgage payments will not become unaffordable doe to unbudgeted interest rate rises during the term of the home loan. Home owners should take advantage of the predictable mortgage repayments and pay off as much of the balance of the loan as possible during this time.

It should be noted that capped mortgage applicants will normally be charged an arrangement fee by the lender. The capped mortgage will also usually come with a higher interest rate than a standard product with a variable interest rate that has no upper or lower limit and that can be changed at the lender’s discretion.

Professional advice should be sought before applying for a capped mortgage to ensure that it is the right mortgage product for your individual needs. An independent mortgage broker will be able to provide you with impartial advice on cap and collar mortgages and whether or not they are suitable for your personal financial situation and will be able to search the entire UK mortgage market with specialist software.

Fixed rate mortgages offer borrowers the ability to help budget for household expenses more accurately because they have an interest rate that remains constant for an agreed portion of the overall term of the mortgage - typically between one and five years.

Unlike variable rate mortgages, the interest rate charged on fixed rate mortgages will not be influenced by changes in either the Bank of England Base Rate (BoEBR) or the lender’s Standard Variable Rate (SVR). Instead, the interest rate will remain constant during the fixed rate period regardless of movements in interest rates on other financial products.

The fixed interest period gives borrowers the stability they need to manage their household budget more effectively, which is why fixed rate mortgages are popular with first-time-buyers and young households.

Fixed rate mortgages are also popular during times of historically low interest rates. Many homeowners fix their interest rates while they believe the cost of borrowing is cheap, therefore locking in the low rates well into the future. However, while fixed rate mortgages provide borrowers with some advantages, there are also several disadvantages.

Fixed interest rates are usually slightly higher than current variable rates. Borrowers should therefore refrain from fixing their rate if they believe that interest rates will either remain stagnant or fall in the near future.

If a fixed interest rate is locked in for a period of time and the variable rate for the same mortgage product remains lower throughout that same period of time, the borrower will pay more interest on their mortgage than required.

Additionally, once the fixed rate period expires, the interest rate will convert to the lender’s Standard Variable Rate. It is therefore advisable for borrowers to assess their remortgage situation before the termination of the fixed rate period.

It is also important to note that most lenders charge an arrangement fee for their fixed rate mortgage products. Therefore, borrowers should assess whether the estimated future savings in interest that can be made by fixing the interest rate is not outweighed by any upfront arrangement or brokerage fees that must be paid.

Borrowers should therefore assess the overall expected cost savings in combination with the ability to manage their household budget more effectively, against any upfront fees that may be charged, before applying for fixed rate mortgages. If borrowers require help in deciding whether to fix their interest rate they should contact an independent mortgage advisor.

An independent mortgage broker can offer unbiased and impartial advice on the entire UK mortgage market. Because they are not tied to specific lenders and products they can find the most appropriate home loan products for their clients based solely on their clients’ needs. Experienced brokers should be able to advise their clients whether they believe interest rates are historically low and the environment is therefore right for locking in a fixed interest rate.

Independent mortgage brokers and financial advisors should also be able to assess their clients’ individual financial circumstances and recommend whether fixed rate mortgage are appropriate based on this.

When applying for mortgages borrowers have the choice of obtaining interest only or repayment mortgages. Interest only mortgages require the borrower to only pay the interest charged each month on the mortgage. The balance of the mortgage remains the same throughout the entire term of the loan.

With repayment mortgages, the monthly payments to the lender comprise an element of interest charged and an element of capital repayment. As long as all the repayments are made on time, repayment mortgages are guaranteed to be repaid at the end of the term. Repayment mortgages are also known as “capital and interest mortgages” because the capital balance is repaid along with the interest payments.

During the term of repayment mortgages the monthly payments made to the lender comprise both an interest portion and a capital repayment portion. At the beginning of the term of the mortgage the interest portion is high and the capital portion low. Over time the interest portion diminishes and the amount of capital repaid increases. At the end of the term of repayment mortgages, the capital portion should be fully repaid.

Repayment mortgages are less risky than interest only mortgages because there will be no outstanding balance at the end of the term. Borrowers will therefore not be required to establish a separate Capital Repayment Vehicle (CRV) such as an endowment policy. Home owners with repayment mortgages are also less likely to suffer from negative equity because they will be constantly decreasing the capital portion of their loan.

Regardless of the reduced risk, borrowers of repayment mortgages should take out decreasing term assurance policies. This type of assurance policy reduces the sum assured roughly in line with the reducing mortgage balance. This will insure that the balance of the loan is repaid upon death of the borrower. By selecting the right type of assurance policy, the borrower will insure that the balance of the mortgage is paid off in full either when the term of the mortgage expires or upon death if they die during the term of the loan.

One disadvantage of repayment mortgages is that the amount of the monthly repayment will be higher than for interest only mortgages. This is because the borrower will make payments towards the capital balance as well as the interest each month. This can make repayment mortgages difficult to afford for first time home buyers and home owners with tight household budgets.

Home owners who opt for interest only mortgages should consider switching to repayment products at some point to ensure they eventually pay off their homes. If the balance of the loan is not paid off during its term the home owner will need to have established a CRV that will pay off the balance for them.

Repayment mortgages therefore have both advantages and disadvantages and borrowers should be well informed of both before applying. Independent mortgage advisers can help borrowers who cannot decide whether to apply for interest only or repayment mortgages by providing expert and impartial advice. Once the assessment has been complete the mortgage broker can assist the home owner in selecting the most appropriate product for their personal needs.