Date Archives March 2013

Vetting Lenders – The Power of Misinformation

Continuing my series with of borrowing knowledge from lenders comes this from Ken Malinowski with Movement Mortgage. Takeaway: before you go see a lender, get a qualified recommendation from someone – preferably a trusted Realtor.

After 16 years as a mortgage loan officer, I guess I shouldn’t be surprised anymore. There are constant industry changes, new regulations and a constant flow of information that affects the process of financing or refinancing a home. Yes, it can be more challenging to obtain a loan today. In my opinion, someone, somewhere, did something bad.

In response the industry now has a policy, procedure, form, or documentation requirement to ensure that it never happens again. I accept that. I also do my best to educate every client on the process and set clear expectations. I wish everyone in my industry did. Loan officers historically have a variety of ways to market and sell our services. Direct mail, word of mouth, email, event sponsorship, etc. I remind realtors and clients often to think of me simply to offer a second opinion to their clients. That used to mean that I would put my rates, fees and loan programs up against a competitor and the client could look at them both and pick the one that best served their needs. Many times, it was a cost savings that tipped the scale in one direction. Other times, it was a completely different loan program that just made more sense for their family. Today though, the second opinion takes on a whole new meaning. I guess I can call it the straw, the tipping point, etc., but today I’m upset and frustrated and quite frankly, a little angry.

Last week I met with two different families who both came to me after speaking with another lender some time ago. They sat down with a loan officer and received advice on what they needed to do to prepare to buy a home. They trusted this professional and the advice he/she gave and followed it to the letter. They both expected their credit scores to rise as a result of their efforts. They were hopeful that the increased credit scores would enable them to obtain a loan with more favorable terms. Fast forward ahead a couple of months. Their realtor encouraged them to contact me. They were shocked to see that the actions they had taken actually had the opposite of the intended result. Their credit scores were now lower than several months ago. Basically they were told to pay off old collections prior to formally applying for a mortgage. By paying off these 3,4 and 5 year debts, the date of last activity on their credit report now showed current instead of being several years old. As a result, the credit scoring models actually lowered their score. I know what you’re thinking, “paying of debt should be a good thing!”. At the end of the day, paying of a debt IS a good thing. But in some cases such as charge offs and collections, it can actually have the opposite effect on your score.

Basically they were given inaccurate information. The advice they were given was wrong. Both families could still obtain a loan, but the loan program was different, the terms weren’t as favorable as they hoped. I felt terrible for them. I’m certain that the lenders they spoke with had the best of intentions and were trying to help. I’m certain they also fully believed the advice they were giving was accurate. They just happened to be wrong and it backfired. Look we are all human, and as human beings we will be prone to mistakes. I’m far from perfect and I’ve had my share of apologies to make in the last 16 years. I just get really upset when I hear of instances like this.

When Jim and I talked about this at the coffee shop, he asked me what I thought the client could have done differently to protect themselves. That brings me back to the beginning. I believe that the term “second opinion” no longer just applies to interest rates, closing costs or loan terms. It also need to apply to the knowledge and advice you’re given by today’s mortgage professionals. The industry is rapidly changing, clients need to protect themselves Ask lots of questions at your appointment. Get a second opinion. Talk to another lender. Ask your real estate agent who they trust. Search the internet for the advice you’re given and read the articles that pop up. Often you will be able to discern for yourselves if the advice you’re given is correct. I did a quick google search for “does paying off old collections hurt my credit score” and the very first article dispelled that myth in just a few sentences.

Read More

New Construction in Charlottesville and Albemarle

In short – there’s lots of new construction in Charlottesville and Albemarle.

It’s been said that 2013 is the year of the return of the spec house; we’re seeing more new construction than we’ve seen in years. Buyers have more options, sellers have more competition.

Four important and relevant stories before we get started:

Why take a Buyer’s Agent to new construction?
Buying new construction without a Realtor? Read this first! (note: this builder is now no longer doing business in Charlottesville, but we have two national (and maybe a third on its way) builders now and many builders use their own contracts – caveat emptor – or: hire competent buyer representation!)
Charlottesville – A Healthy Housing Market (for New Construction) – With some Context

The most important home inspection in the new construction process

The evolution of the new construction market in Charlottesville* has been one where there were once dozens of homebuilders and now there are a handful. And that handful are building. A lot.

The ramifications of all of this construction are many. A few to start:

– Increased competition for existing homes
– Denuding of the landscape
– More choice for homebuyers
– The opportunity for homebuilders to differentiate themselves is more challenging than ever … if everyone offers granite and everyone offers hardiplank and everyone offers an open floor plan …
– Those seeking to purchase homes now with resale in mind (that should be all of you) need to keep at least two things in mind:
1) The siting of the house matters (location, location, location)
2) You’re likely to be competing against new construction for quite some time.
– Some of the neighborhoods on the map have 5-10 homes to be built (Evangeline for example), some have 10-50 (Dunlora Forest) and some have 100+ (Old Trail)

View New construction in Charlottesville in a larger map

Real estate is local – and I’m thinking that our area may be leading the charge in a return to new construction.

Mike Simonsen from Altos Research writes (read the whole post – he describes a lot of important topics and segments of the real estate recovery):

Since 2007, new housing starts have been anemic. The long-term average construction rates are about 1.5MM homes per year. In the last six years, we’ve averaged well under 1MM. And since 2009, the average is closer to 500,000. Meanwhile population and household formation keeps on trucking. The over-construction that happened in the bubble is a distant memory. See the chart to the right. Construction volume under the orange line are “undersupplied” conditions. The homebuilders imploded so profoundly after the bubble, that we haven’t had this few new homes being built since 1959.

Read More

Jim’s Monthly Note #2

Last month’s note was fun to write, and I sincerely appreciate the few of you who subscribed and read. I’m finishing up the second note and will be publishing/sending it tomorrow morning. Working title: Seeking Better Realtors, Population Controls, The Market & Realtors -v- Zillow

After years of intending to write a monthly newsletter, I’m finally committing to doing one, because I’m writing what I want to write, not necessarily what I think I should write. Matter of fact, writing this note excites me … so much that I’d love to hit “send” right now.

If you’re able to tolerate reading one note a month (of stuff that I’m not going to publish anywhere else) please subscribe to receive the note via email. Once a month. No more. No less.

powered by TinyLetter

If you happen to subscribe in the next month or so, I’ll send you this month’s note when I can – it’s a manual process, so I’ll send out the notes once a week or so.

(and please feel free to share my notes should you be so inclined)

Read More

The Best, Most Popular Neighborhood in Charlottesville is …

(part one of two)

The Best, Most Popular Neighborhood in Charlottesville is …

Mill Creek. Redfields. Western Ridge. Bellair, North Downtown?

All of the above. None of the above.

The real answer to, “what is the best neighborhood in Charlottesville” – depends on you.

What does “best” mean to you?

Most popular? I could answer that by looking at the search data to determine what are the “most searched” neighborhoods.

How do you define “best” neighborhood ?

There are a lot of factors that go into the equation of “is this the ‘best’ neighborhood for me? These are some –

Read More