Georgia FHA Home Loans - (& Opinion)

SOME CONTENT OF THIS ARTICLE IS OUTDATED - LENDING GUIDELINES HAVE CHANGED
100% NO-SEASONED CASH OUT REFINANCING ON INVESTMENTS IS NOT CURRENTLY AVAILABLE (2007)

PLEASE DO NOT CALL ABOUT THIS PROGRAM! THIS ARTICLE WAS WRITTEN IN LATE 2006 - THIS IS LONG GONE!

There are several types of "seasoning" in real estate finance. There is "seasoning" of funds (the buyer's funds), there is seller "seasoning on title" of the property being sold and there is "title seasoning" on a property being refinanced. Seasoning simply means "the period of time which a property or asset has been under the direct control of a party". In other words how long you've had it.

Many loans for purchase require that (a) the seller seasoning (how long the seller has been on the title of the property being sold) be at least 6 months and (b) the funds the purchaser will be using for closing have been in their possession for a minimum of 2 months.

Refinancing is a different story altogether. In a "refi" there is no requirement for seasoning of funds but there is almost always a requirement for seasoning of property or the length of time the borrower has been on the title to the property. Until recently almost all lenders have required the owner of an investment property to have been "on title" for a minimum of 6 months and in most cases 12 months to refi the property and take the full appraised value as the loan amount. This can be big.

The ideal situation for this type of refinancing is when you have acquired a property below value with your own cash, hard money or against your HELOC on your primary residence and did some rehab work to a vacant property increasing the value. Maybe you paid $185,000 for the property, put $50,000 into it and now it's worth $299,000. You could (a) sell it and pay some huge capital gains or (b) refinance and take cash out deferring taxes until you sell (or you could also put the property into a 1031 exchange and further defer the taxes).

Almost any bank or lender will tell you you (a) need a minimum of 6 months seasoning on title or (b) can refinance only to the original sales price of your new property - which would not pay you back for rehab or upgrades. However, we - through our massive connections in the industry - can offer a borrower 100% cash out refinancing to the new appraised value on investment properties with no seasoning on title. 

You know, just typing that title "100% No Seasoning Cash Out Refi on Investment Properties - with Stated Income!" makes me wonder why some lenders are so strict they don't even want to finance a primary residence that has even one real estate investment property in the same subdivision and then you have these seemingly caution less private lenders offering deals like this. Keep reading, my head is spinning from having this investor contact us. Real estate investment financing is an odd and ever changing business!

Basically this is the pinnacle for real estate investor financing. In fact if you are a real estate investor looking for financing I can tell you from financing over 2000 real estate transactions this loan program is not going to be available long.

Let's say you've purchased a property with your own cash, your HELOC (don't do that) or hard money. Let's also say you've done upgrades and repairs. Here's what this really means: you can cash out, pay yourself with tax deferred (borrowed) money, and pay off the original debt. I just have to say it again because it's so hard to believe: 100% No Seasoning Cash Out Refi on Investment Properties - with Stated Income!

If you've owned the property for 7 days (been on title for seven days) this investor will loan you 100% of the new appraised value. Not the purchase price like some lenders, the APPRAISED value. Of course it will be their appraiser at your cost but who cares!?

And let me go a little farther to say if you ask the rate anywhere near the beginning of the conversation we may be subject to break out in laughter. The rate, to me, is very reasonable for the risk this lender is taking in loaning 100% of the value of an investment property.

Advantages?

No pre-payment penalty
620 Score for Full Doc (read it again, it said 620)
650 Score for Stated
NO Mortgage Lates
NO Trade Lates
Judgments over $500 have to be paid at closing
Medical judgments are ignored


I will remind you that this is going to be a tough loan to do and the lender, not you, not me, calls the shots. If they ask for it, get it. If you argue with my staff member who asks for it they have my permission to tell you to buzz off :) Underwriting decisions in 48 hours but they do have to wait for you to get your documents to me, me to run the standard verifications and the appraiser to submit the appraisal. So what if it takes 30 days? This is ONE HUNDRED PERCENT of the APPRAISED VALUE on an INVESTMENT PROPERTY with NO SEASONING!!!!

Recommendations

Have all of your paperwork in order: 2 years of tax returns, 2 months of bank statements, 1 month of pay stubs, face value on life insurance, amount in savings/stocks/CD's, other properties, leases, rental agreements, etc.

If you are self employed we'll need either 2 years of business licenses or 2 years of CPA letters. We'll need your business tax returns for 2 years and your business bank account for 2 months.

BE HONEST with us about EVERYTHING. If you're honest with us in the beginning we'll work with you to get over the humps no matter what it takes. If you are not honest with us we're going to find out anyway and then we won't be happy and you won't be happy.

ONCE YOU'VE APPLIED do not go make any purchases, do not apply for credit ANYWHERE ELSE. If you don't think you want to work with us, don't start. Don't charge up your credit cards. Don't change job status in any way except maybe to get a promotion and a raise!

(c)2006 Ken Cook. All rights reserved. Permission to reprint this article is granted with the following limitations: The article must not be edited except for spelling. This copyright must be included immediately following the article as it appears here. This article may not be included in any materials commercially available for sale or where any fee is charged even for other materials without prior written consent.

Investor funding available in Georgia and Florida from Novation Mortgage.

Novation Mortgage, 2501 E Piedmont Road, Suite 201, Marietta, GA 30062. Georgia Residential Mortgage Licensee #20014. Equal Housing Lender. A Direct Mortgage Lender.

There are many emotions associated with the acquisition of an expensive item. Though we rarely regard it as simply an "item" your home is most likely the most expensive acquisition you'll ever make. There are many upsides to purchasing a home whether it's your first or tenth. We'll review those in this article and hopefully you'll finish your reading having obtained more knowledge which is the power to overcome anxiety, fear and trepidation often associated with a home purchase.

Firstly, at the risk of sounding flagrently rude, forget what you think you know about real estate purchasing. There are going to be a minimum of 3 professionals to help or hinder you. Learn what the jobs of these 3 people are and you'll enjoy the trip much better!

Mortgage Professional - most people call this person as a side note. Generally people call a real estate agent first. Hmmmm, why would this be the wrong order? Simple, if you can't afford it don't waste your time looking at it. A trained and seasoned mortgage professional like those at Novation Mortgage will spend plenty of time with you helping you understand the basics of real estate finance. While it's impossible to compact 5 to 10 years or more of mortgage experience into a 30 minute consultation your loan professional will do their best to understand your desires and address the parts of the industry which most apply to your situation.

The average loan professional at Novation Mortgage has been a part of at least 50 or more real estate closings just in the last 12 months. Most real estate agents have been a part of less than 1 per month. So it's simple to see who has a vastly greater experience and knowledge of the financing of real estate. However ...

Real Estate Agent (or broker) - is the second person you need to contact. Do NOT attempt to make a home purchase on your own. Even if your parents have bought and sold 15 houses in the last 20 years they do not have at their disposal the tools and knowledge base available to a professional real estate agent. I do urge you to choose an agent who has been in the business for at least 5 years and has sold at least 50 homes but even if you don't and you do choose an agent who is new or part time and they have the understanding that we know more about real estate financing than the owner of their company we'll do just fine and get along famously. I love real estate agents, my baby sister has been an agent and broker for over 30 years!

Your agent has a lot of responsibility beginning with finding the property which most fits your needs and budget. That's why we work together first to set your budget. Your agent will be "making the offer" on your behalf using the number YOU pick as an offer amount. Your agent also has responsibilities which are outside the capablities of the average friend or relative such as being able to find the history on the home, subdivision, area, etc. And finding the amount of taxes for your property and even getting any special disclosures on the property.

Things that are not and need not be your agents responsibility or task starts with scheduling the closing date (a very backwards thought of the real estate industry) since they have absolutely no control over when the lender will be ready to cut the check (the lender is actually buying your home and you're just paying them back), selecting an appraiser (in fact recently most lenders require you to use an approved appraiser) and never ever speaking to the loan office on your behalf. It's your money and those payments could last up to 40 years!

Real Estate Appraiser - never tell the appraiser what you'd like to see the value on the home be. Let them tell you what it actually is. Appraisers may bring in a value lower than the asking price at which time it is the responsibility of your agent to renegotiate the contract (hopefully they did the right thing and made the offer subject to appraisal so you can get your earnest money back)! If you want the house really badly and the appraiser brings it in at a lower price and the seller won't budge: you ain't buying and they ain't selling!

Everyone has a different set of psychological factors which result in different emotions relative to the same subject. In this article the subject is the psychological factors related to the acquisition of your first home.

Let's examine why you may be in the market for a new home. While this list is not exhaustive it most likely includes points relavant to your situation.

1. Getting Married
2. Having a Child
3. Tired of Paying Rent
4. Getting a Divorce
5. Forced by Disaster
6. Discovered the Value of Ownership
7. Inherited Some Money
8. Building a Retirement Plan

Just look at that list. Do you see anything there which would not have its own load of stress? You may think that inheriting money would not have much associated stress but it can and usually does. It presents a whole new set of challenges with which the recipient is unfamiliar. Unfamiliarity inherently causes fear. Fear is overcome by knowledge and experience.

That's where we come in. We have knowledge and experience in working with new home buyers in almost every situation. We can really take a load from any new home buyer by sharing this article with them so they'll have some idea of what to expect!

Regardless of the reason behind your drive to make this new acquisition the steps to finalize are ultimately the same. You'll need to first locate the property which holds your
interest, you'll need to make an offer, you'll need to satisfy the offer (pay for the acquisition) either with your own money or someone else's, you'll visit an attorney's office and then you'll get your keys and can move in. At least that's the general idea. But let's start from the top.

Chances are it's too late for you to follow our first steps and almost every first time (and seasoned) home buyer do things in the wrong order - so don't sweat it if you did.

But here is the correct order of events for every home purchase using someone else's money whether it is your first, your third or your one hundredth.

Be Sure of Your Motivating Factors

Why are you making this acquisition? What special purpose will this acquisition serve? What is it about buying a home that you need to consider?

Don't just ponder these questions in your mind ... write them down with your detailed answers! That first question is very important. If you don't know why you're doing this you have no purpose and an event without purpose is difficult to control. I have long said to my children, "Control your life or life will control you."

Entering into a major event like the acquisition of a home without knowing why you're doing so is asking for trouble. You want negative emotional factors? Try buying a home "just because". Chances are your reason is one of the eight listed above or at least similar to one of those reasons. Let's take a brief glimpse at some of the possible stress factors related to each of the above events. You should be able to identify your own stress factors but these will help you get started. Again, as you identify your stress factors write them down in detail.

Getting Married - certainly has stress. Men handle stress differently than women in almost every situation and perhaps none is more punctuated than how differently men and women deal with the wedding and the prospect of marital bliss. Men are generally quiet and feel uninvolved in the wedding process and so leave it to "the woman". Nothing could be more dangerous because in a man's mind he's already assuming that he knows nothing about weddings, it's girl stuff and no matter what he does someone is going to change it.

Meanwhile the poor fellow is either taking this step very seriously and being rightfully concerned about how to be the proper man of the house or he's obliterous and carefree leaving everything to "the woman" to make it all right. Either way he's about to experience one of the most major reconstructions of his life since birth.

Ladies have their stress for sure. Some of it is manifested in the wedding planning phase which may be a good diversion for them but underneath they are concerned about the
changes soon to come to their lives as well. Will he be okay once we get married? How will he change? How will I change? When will we have children? What if one of us gets transferred? Oh my gosh! We don't have a home yet!

There ya go. That's about enough stress for me just writing the words and I've already been through these things. That's why we're here to help and hopefully you're reading this long before your wedding date. If not be cool, help is on the way.

Having a Child - is certainly a special and priveledged event. It is usually the time where a man an woman are focused intently on the same thing with many of the same emotions.

Don't get me wrong, the lady is certainly going to experience child birth in ways far beyond that of the man but in love and confusion, fear and hope I believe most men and women are on the same page even if the woman understands the words on that page to a much greater degree!

It's likely the uncertainty that causes the most stress when dealing with giving life to a child. Will it be a boy or girl? Will he be healthy? Will she have brown eyes? How
much hair will he have when he is born? Will I be afraid to hold her?

And the lady immediately thinks: Nursery. I want the best baby room ever! I want white walls with yellow trim and little dancing elephants ..... wait. We live in an apartment!

Honeeeeeee...!!!!!

Tired of Paying Rent - happens to almost everyone who ever rents. Some people like to rent because it means less responsibility. There is usually no upkeep to the property and rarely upkeep to the landscaping unless you are renting a private residence. Less responsibility means less stress and I fear there are many renters simply not making the short step to ownership solely because of the fear of this responsibility. Hint: it's not that much stress and the payoff is large.

I remember when I got tired of paying rent. It became a point of great contention. I did what any redblooded young man would do ... I moved. To another place where I was still paying rent. Duh!

Realizing that you are "pouring money down the drain" can have a very exhaustive effect on your pyche. It really gets you every time you have to write that rent check. Well,
there is hope. Keep reading!

Getting A Divorce - is a celebration for a very few. Even for them it's usually only one sided. Somebody has to get a new home. I've dealt with quite a few recently divorced
buyers and I do my best to make it smooth and simple. Generally recently divorced buyers are going to have to provide more documentation to the lender than the "average" buyer.

Firstly they'll have to show their divorce decree to show how the previously owned property was divided and who owes what. There's an uh-oh that comes with almost every divorce:

Just because the judge says your ex is totally responsible for any previous debt does not, in the loan holder's view, relieve you from your duties of repaying it. If your name is on the loan you are still responsible for the timely repayment of that loan. The judges DOES NOT have any authority over the lender - if your ex doesn't pay and on time it WILL affect your credit and your ability to borrow in the future.

Forced By Disaster - when I started penning this article some months ago New Orleans had yet to be devestated. With hundreds of thousands of people displaced we're all, at least in the SouthEast, seeing the impact and what it's like to be forced to move because of disaster. There is no way to completely understand the stress of moving because of the loss of a home. Needless to say this is a very emotional time and I would not want to be in your shoes if this is you.

Discovered The Value of Home Ownership - Hello! If you've just now discovered the benefits and powers of home ownership (property ownership in general) I'm proud of you.

Hopefully you're still a teenager but, if not, welcome aboard! Now you're about to discover a whole new world. Just do yourself a big favor and don't pretend you know what you're doing. Even if you have a clue that's about all you have. What you really need to do is interview the professionals you're going to choose to help you along the way.

Don't select a real estate agent just because it's your friend's sister. Select an agent who has at least 5 years of experience. Chances are they've bought at least five homes in that time period for their clients - but ask them how many closings they've had where they were representing the buyer - 100 or more would be best. Chose a loan specialist who has been in the business for at least 2 years. If they work for me this means they've done at least 100 closings so they are well experienced. Don't be afraid to ask!

Inhereted Some Money - I believe there is no greater investment than real estate. What you probably don't want to do, unless you inhereted millions, is use all of your available cash to make the purchases. What you will want to do is use cash for down payments and repairs. You're in a very good position if this is you and you've inhereted at least a few thousand dollars.

Building A Retirement Plan - Thinking ahead is great. Investing in real estate can bring a very solid future and allow you to continue the lifestyle you've been used to. You may
even be able to give yourself a raise. Do what? How will it affect your medicare? Come ON! You want to live as a slave to a government funded (my taxes) retirement and medical plan or do you want to be able to go where you want to go and do what you want to do? If you're under 50 and plan on retiring at 62 you can still build yourself a great retirement plan.


Special Considerations For First Time Home Owners

Chances are you've never purchased an entire house full of window treatments. Maybe you've never purchased your own furniture. You've almost certainly never been responsible for the acquisition and maintenance of major appliances like a refrigerator. Don't panic but these are important considerations for buying your first home. (Although you will be allowed to panic momentarily when you realize just how much your drapes are going to cost!)

Maintenance costs will obviously be greater on older homes, larger homes, special construction homes, homes built on or near the water, etc.

END PART ONE

(c)2006 Ken Cook. All rights reserved. Permission to reprint this article is granted with the following limitations: The article must not be edited except for spelling. This copyright must be included immediately following the article as it appears here. This article may not be included in any materials commercially available for sale or where any fee is charged even for other materials without prior written consent.

Investor funding available in Georgia and Florida from Novation Mortgage.

"I am having trouble getting to the closing table with the current broker I went with (dont laugh), can you get me a 100% LTV on this Porterdale property, and how quickly can you close? The contract close date is (in less than 10 days). Can you close by this date? All the title work has been done and appraisal."

I quoted that because it was an email that came to one of my team members while several of us were talking about how often people call us, talk to us, learn how to do this and then go someplace else usually because that other place *lied* to them, almost always about rate, loan product and closing costs, to get them away from us. And we did laugh, we all laughed. Heartily.

No less than twice every month does this happen. Some inexperienced loan officer at some unnamed broker or bank tells a caller something crazy that will never happen. In fact we started the clock ticking today on a first time investor who heard our ads on the radio, called us, got some advice, got some pricing and found someone to beat our pricing. Never gonna happen.

First of all they'll never get the loan for what the other broker priced it ... it's a lie to get them to leave our company. How do I know this? Experience and integrity. Secondly they quoted them on an owner occupied loan ... this is for an investment property ... without seeing their credit scores, appraisal, financials, etc., which we had in hand. Closing an investment property as a primary residence could at the very least cost you thousand of dollars in fines and fees and at worst land you in the jail house.

If you've been to one of my seminars you know I don't pull any punches. This is my business and my team's business. We Do Real Estate Investment and we do it better than anyone. We have more programs, more experience and more reliability.

Call my office. Schedule yourself to attend at least my Investor Quickstart Seminar. It won't take more than 10 minutes to realize why we're the one team you'll want to be on when it comes to real estate investing.

678-946-0100 and ask to schedule a seat in the Real Estate Investor Quick Start Seminar.

If you'd like to learn more about these subjects and others visit Cook Property Ventures and get in on some of our seminars, workshops and conference calls! 

(c)2006 Ken Cook. All rights reserved. Permission to reprint this article is granted with the following limitations: The article must not be edited except for spelling. This copyright must be included immediately following the article as it appears here. This article may not be included in any materials commercially available for sale or where any fee is charged even for other materials without prior written consent.

Unlike many real estate investment "gurus" I make my income from investing in real estate and financing real estate investments ... not from selling seminars, CD's and books. I've done over 60 seminars and have never received one dime from admission fees. I've given away literally thousands of CD's. So why do I do it?

Simple: If you help enough people get what they want you'll be greatly enriched which may also (and in my industry does) include becoming wealthy.

My industry, the real estate investment industry, is filled with many very wealthy people. It is also filled with a great number of very benevolent people; People who give a large portion of their profit to support charities. There is, however, a dark side. There is a disproportionate number of so called "investment gurus" who have little or no actual experience in the industry who publish books, conduct costly seminars and who literally prey on your eagerness to learn. Many of these people learned from seminars and books and have never had success in the industry.

Because of my depth in the industry and exposure to new investors I spend a great deal of time correcting inaccurate or outright dishonest information which has been gleaned from books, radio shows, seminars, etc. In fact in a direct example I recently participated in The Learning Annex's Wealth Building Seminar with Donald Trump and Robert Kyosaki among others. Where I had been stationed on the program I was seated next to a woman who hosts a Sunday afternoon radio talk show on the largest Atlanta AM radio station. Her show deals primarily with real estate.

Listening to her answer questions about real estate investing, mortgages, transactions, etc., it didn't take long to realize that although she had some information probably gathered from the internet, she really didn't know what she was talking about. Yet here she is every Sunday answering questions from dozens of callers heard by thousands of listeners and her answers are often completely wrong!

So I asked her later in an email, in what I believed to be a nice manner, if she could tell me where she has experience or education in real estate, financing, business or investing. According to her online resume her experience is as a journalist (reporter and writer) and her education is in journalism.

Hmmmmm....
 
So let me tell you now, as a new investor, that you cannot and should not believe every word out of the mouth or off the pages of any source. Including, but certainly not limited to, the national news media. If you do you'll eventually lose or get burned badly unless you are extremely lucky.

So am I going to tell you that I'm always right? No - I'm just going to tell you that I'm never wrong. Simply because if I do not know the answer I'm not going to make one up like my friend from the radio in Atlanta. I get paid when deals are done. I don't charge for my educational projects (at least at this time I do not) but rather make income from financing deals and doing deals myself.

Now I have just Three Short Points for you as a new investor:
 
1) Don't let fear stop you. If it's fear alone that is holding you back then you're probably missing on a great opportunity - EVEN IN A DOWN MARKET. Fear is the number one success killer and it has no boundaries. Whether you are a prince or a pauper or anywhere in between you can succumb to fear and lose a lifetime of opportunity.

 
2) Don't even take your first step without a business plan. Why do you want to invest? (Write it down) What types of investments do you want to make? (Write it down) What are you going to do with your investments? (Write it down) Moving forward in any business without a plan is crazy. You'll always be swept away by emotional impulses if you don't have a plan and you don't stick to that plan. You can make minor adjustments along the way but don't deviate from that plan without a great amount of painful consideration.

 
3) Use leverage instead of cash. ALWAYS use other people's money even if you think it's too expensive because it's never as expensive as using your own cash. I recently had a very wealthy first time investor come to me wanting to pay cash for properties. I showed him how it would take only a few deals to completely delete all of his savings efforts but could leverage what he has and amass a great number of income producing properties in a very short period of time.
 

There is one more point that I won't include in these three main points but as a new investor I always require (if I'm providing the funding) that you be able to afford to make the payments on the property for a lengthy period of time even if the property is not leased. On additional properties this isn't as crucial because you'll have had some experience turning or holding properties. Regardless of what I say and how intelligent you are you're going to fail to follow advice and direction in some areas on your first deal. I've made several millionaires and can only show you what I've shown them. You CAN do it ... whether you WILL or not is up to YOU!

As one of the top performing brokers in Georgia I've seen it all. I do more deals in one month than most real estate investors do in 10 years so there aren't many surprises left. If you want to invest in Georgia or Florida I can definitely help you. Feel free to email me from anywhere in the nation at any time for my opinion on something you've heard or something you want to attempt to do.

At your service!

Ken

I get this one. Often.

Can I use my HELOC to buy an investment property or make a down payment on an investment property?

Why of course you can. But should you? 

Unfortunately certain factions have begun to look at 100% mortgages as a fraud being perpetrated against "good citizens" by the mortgage industry. Here are a couple of facts for you:

Interest rates on 100% full doc investment loans are are less than most current HELOC rates. 

I just priced a HELOC for myself from Bank of America. I have excellent credit and good income. The rate I got on the $130,000 HELOC which is enough to purchase an investment property for cash was 8.59%. This is due in 10 years.

Then I priced a 100% investor acquisition (30 year fixed with no prepayment penalty) through NOVATION MORTGAGE and got a rate of 8.29%. This is due in 30 years. There is no private mortage insurance on this loan, either.

Even if I only took out a few thousand dollars to make a down payment it doesn't make much sense. You have to understand blended rates to fully comprehend this. If I get the $13,000 HELOC to make a down payment and borrow 90% to acquire I still have some mark up from the lender for going to 100% of the sales price so I'm actually hurting myself. Plus my DTI lowers because now the down payment is borrowed.

So what makes more sense?

To me it makes much more sense to keep my primary equity intact and not crossed with my investment. Go with the 100% loan whether it's 1 loan with no PMI, an 80/20 or a 70/30 and all secured by the subject property. Now there's no mixing of funds if I ever get into a 1031 exchange and all of my home equity is still available should I need it for something else.

My 2 cents. 

Okay - I got that comment to my other post about $15 for your current lender to fax a one page payoff to your new lender. It does, indeed, sound absorbitant. But let's look at it from a personal perspective. Let's say you have 800 clients you manage. Let's call you an Account Specialist. 

Let's say of those 800 clients you have about 10 minutes of work each month to perform as a standard part of your job. That will require roughly 34 hours per week. Now let's throw in that maybe 10 percent of them caused a variation in the amount of time required costing an extra 10 minutes. That's another 3.4 hours bringing you to 37.4 hours.

Now because of government regulations on how people are paid for the jobs they do and the hours they work you must clock out at exactly 8 hours every day.

Finally, for this scenario, let's say that you have 8 clients leave and 10 new clients come onboard every month. Let's say for a leaving client you have to spend 30 minutes "in the system" verifying all "i's" have been dotted and "t's" have been crossed because, once again, you're in one of the most over-regulated industries in the nation. And let's say that for every new client it takes about 1 hour to "get them into the system" and make sure every entry is compliant.

We didn't even mention that as the Account Specialist you have a supervisor, a QC and Compliance director, and a few other checks and balances type support staff.

Now, let's get to the "junk fee" part of the $15 for one page fax fee.

You're in the middle of inputting a new client when a request comes in to verify a payoff. You put it "Next Order of Business" because you know someone is trying to send your company a sizeable check. So as soon as you finish what you were doing, instead of moving on to the next 14 daily items you have to complete you "pull up the account" which is not a feat of magic but takes some time to verify names, addresses and account numbers. You print the payoff which now must be signed by the Account Manager and the Quality Control Officer because it's going to be "guaranteed good" through a specific date.

Once you have the necessary signatures then you can fax that one page to the person who requested it. 

And you want all that done for free?

I hope you don't think I'm being rude because I'm really not. I do, however, tire of hearing about "junk fees". Yes, there are real junk fees. We don't charge any. Someone earns a living from every penny we collect. And, at first glance, $15 does sound a bit much for faxing "just one page". If all it took to fax that one page was just to hit one of those "EASY" buttons like they sell at Staples I would agree. Please understand that in this particular case there is much more to it than just magically having a piece of authorized paper appear in the fax machine headed to your requested destination.

Now then. There has been a lot of discussion about letting lenders and brokers compile fees into just on big lump. This would allow for "hiding" of "junk fees". The reason is because so many people are complaining about "junk fees" that are not junk at all. Talking heads with no education or experience in the industry like Clark Howard have no concept of what happens behind the scenes. So the public listens to someone who has no experience or education and follows their lead. Then some ridiculous legislation comes into play that is created by another person or group who has no education or experience and then is voted on by a larger group of people who are equally non-educated and inexperienced. So you end up paying one big fee instead of 10 small ones.

Sound better?

Thanks,
Ken

You've passed the exam. A broker has brought you on or you've leased desk space from a mega broker. You've got your business cards and your lockbox. You're pumped full of information and ready to "get at 'em!"

Now what?

Maybe you know exactly what to do first. However surprising in may be there are literally thousands of sales professionals in every field including real estate and mortgages who get up to the starting gate and sit down. Oh they're excited enough, educated enough, hungry enough, and ready to go. They simply don't know how to put one foot in front of the other and get out of the gate.

You're in luck. Even though I'm not your broker, I'm not charging you for this information and may never even know your name (although I'd really like to) I'm going to give you your first sale. Actually I'm going to point you to it and you're just going to go get it. Seriously, I'm going to tell you right now where to get your first sale.

If you're skeptical go get your favorite beverage and relax because you're going to have to read this more than once. When you do and you follow the very simple steps in this article you're going to see more activity than you ever dreamed. The only way you won't see activity is if you do not follow these very simple and even unskilled steps.

You will need to do a little homework but you won't even have to leave the comfort of the place you’re sitting or laying right now. Just make sure you have a pen and a pad ready or some other portable means of recording a few short words. I'm going to tell you where the treasure is but because I'm not familiar with your area you're going to have to be my guide.

Your first (or next) sale is getting closer by the second!

Got your writing stuff, PDA, laptop or whatever you prefer? Great! Here's where we have to start. Now I know where the treasure is and it's not even allusive. It's closer than you think ... in fact I can see it from here. But wait, I need to tell you how you get there but I don't know your area so here's what I need you to do. First I want you to do these three things. Write them down or you're wasting your time. There's really no time limit but I don't want you to run out of gas before you pick up your paycheck so do it right now. Right these down:

1) The names of 20 people you talk to regularly. Maybe every day or maybe once a month. Even your spouse and children count on this one.

2) The names of 5 businesses you frequent and the name of at least one person who works there. If you don't know ASK!

3) The street addresses of 10 properties which are not currently listed which you would really like to list.

Are you done? Great. Now keep writing because here's what I want you to do now. I want you to get that list of the names of 20 people you talk to regularly and write down all of the following along with their name. If you don't know the answers ASK THEM! This is not a suggestion; this is the direction to your first (or next) sale. Write these down along with the name:

1) Their phone, address and email (even if you already know it)
2) Their birthday
3) Their anniversary, graduation date or other important date such as a child's birth date
4) The name of their significant other/children
5) Something very special about them such as "Jim smokes only Honduran maduro wrapper torpedo cigars" or "Alicia sings in the community choir and is the head of the Lady’s Ministry at Corner Church" or "Myleah's favorite color is lemon yellow and her eyes are dark brown"

Okay then! If I could only see your list I'd know exactly how to get to your treasure ... I could beat you there and get it before you. But that's not why I'm taking the time to write this. I want you to get the treasure for yourself and your family or friends.

Complete that list now - if you wait you may run out of gas on the way to your treasure and someone you don't know, trust me, WILL beat you to it. So here's what you're going to do beginning the very first thing the day after you complete your list.

1) Mail everyone on that list a short letter telling them you are in the real estate business now and you would greatly appreciate them sharing your contact information with their friends, family members and other connections.
2) CALL them in SEVEN (7) days to make sure they got the letter and ASK them to give you the name of someone else they know that you don't know and get that address, too. (Don't call them - it's not worth it with the new Do Not Call rules). Send them a short letter or greeting card with at least THREE of your business cards in it.
3) NEVER miss sending a greeting card on every one of those special days. If they are one of your phonable friends call them, too. NEVER miss the greeting card because they'll hang on to it and remember it for a long time.
4) When you visit one of the businesses on your list take the same letter in a sealed envelope. Give it to the person you know there. Waiter, greeter, cashier, sales clerk, whatever. Tell them it's a letter about your business that you are a real estate agent (or dog shampoo technician) and you'd appreciate it if they read the letter. If it's wait staff you'd better be a good tipper (20s considered good, by the way).
5) Create a PERSONALIZED LETTER introducing yourself and your business. Make it short and pointed. No more than two or three SHORT paragraphs. Address the envelopes and sign the letters BY HAND (printed return address is okay) and mail those to the owners of the 10 properties you'd really like to list. Keep mailing these every few months or so. Make sure to include THREE business cards in every letter you send and ask if they could refer the business to you. If you don't have your photo on your business cards I'd recommend having it added for this purpose especially.

Now then. You're treasure is on that street. You're GOING to find it and you are GOING to make your first (or next) sale very quickly if you just follow these instructions religiously. Want faster results? Increase the number of names you put on your list.

One last tip that I always follow. Never leave home without at least 20 business cards on your person. Whether you're getting gas or visiting the doctor you're going to meet someone new. You'll be surprised how many people around you are already talking about real estate either for their self or for investment purposes.

If you need further input or assistance I'll be happy to provide as much as I can. Just email me and I'll respond as quickly as possible.

Relentless Persistence with Focused Drive

Here's to your next sale,
Ken

Copyright©2006 Ken Cook All Rights Reserved. Permission to reprint this article is granted under the following conditions: The author is notified immediately upon posting or printing and, if a web posting a link is provided along with any username and password required to have full access to the article and commentary. If the republication is digital such as an email or PDF a copy must be sent to the author immediately. If the republication is hard a copy of the entire publication in which it is contained must be delivered to the author. In no even shall delivery or notification be more than 7 calendar days from publication time. You must republish the entire article including this section is reprinted in full with no modifications or in column commentary.

Novation Mortgage, 2501 E Piedmont Road, Suite 201, Marietta, GA 30062 - Georgia Residential Mortgage Licensee 20014. Florida Mortgage Broker Business  MBB 0703760 - FHA Lender ID Number: 25600-0000-2 - Equal Housing Lender

Nothing in this content should be considered investment advice. Users of this content should consult with their own attorney, broker, or other financial adviser prior to making any investment decision. Novation Mortgage, LLC and its owners, partners, principals, employees, associates, contractors nor assignees, shall have no liability for investment decisions made by any user of this website based upon the information contained within this article.

Here's the prime example. Look at almost any web portal today (the big ones at least) and you'll more likely than not see an advertisement saying something like "A $280,000 mortgage for $875 per month. Click Here."

What's even more amusing to me is that these ads are usually placed not by lenders or brokers but by lead harvesting companies like Lower My Bills or Lending Tree. Oh, you didn't know those are not lenders? Nope - they are lead generators only and do not directly offer financing. But, I digress.

Are loans like that available? Yes they are. They are called Payment Option ARM's or POA's. Can you qualify for it? Maybe. Is it the best loan for you? Probably not.

Here's a call my mortgage division receives at least a couple of times per week:

Receptionist: Thank you for calling Novation Mortgage, this is Rusti, how may I help you?
Caller: Yeah, I just heard your ad on the radio and wanted to get a rate.
Rusti: Great. Is this for an investment property or a primary residence?
Caller: Oh, investment.
Rusti: And is this for purchase or refinance?
Caller: What difference does that make? I just want to know what your rates are.
Rusti: Yes, sir. I'll be glad to transfer you to a specialist.
(Rusti on intercom to specialist): I have a new caller asking for rates on investment properties.
Specialist: Hello, this is Joe, what can I do for you today?
Caller: I'm just trying to get a rate.
Joe: Great. I'll be glad to help you with that. Rusti said this is an investment property. Is this for purchase or refinance?
Caller: Good grief! Why can't you people just give me a rate?
Joe: Well, sir. I can just give you a rate. But, we here at Novation Mortgage pride ourselves on being honest and accurate with all the information we provide to our clients and prospects. Now, would you like YOUR rate or will just any rate do?
Caller: Actually I'd prefer my rate but I didn't know it was so complicated.

Now, had this caller called the average run of the mill lender or broker the call would have been much shorter and would have almost certainly involved an incorrect interest rate which would have resulted in great angst when the time came to reveal the actual rate.

Because of the advertising methods of most of the people in the mortgage industry today the general public really has no idea of the most important aspects of borrowing. What's more important than rate? Whether or not the applicant can actually qualify for the loan. Without being qualified the rate is totally moot. Secondly is the property. Is it acceptable for this loan product?

If you are an agent selling a house based on the loan you're likely setting yourself up for extra headaches which you really should leave to the loan officer. Yes, I understand the prospect is going to ask you questions about the loan. I train my RE Agents to refer all questions about financing back to the loan specialist whether they work for my company or another lender. We'll look at the loan documentation to see if it's fair and accurate but that's it.

What I do have my RE Agents address with the client is if they have received a rate from a lender, bank or broker but have not yet completed the loan application that the rate they have is most likely incorrect so be braced for changes. Until an underwriter sees the credit, the income documentation and the appraisal and gives the approval stamp the rate, the LTV and even the approval status can change.

Here are 8 very important factors that can cause the rate to change from that pre-application phone call to the closing. Please add your stories so other agents and loan officers can benefit (and chuckle or have nightmares) too!

1. Derogatory credit unknown to the applicant. Credit scores dictate loan qualification as well as interest rate. For lower scores there are "hits" to the rate. While one person with the same job, income, assets, and same loan scenario may qualify for an interest rate of say 6.5 yet another person with just one late mortgage payment may either not qualify for that loan or there may be a 1 point "hit to the rate" making their rate a full 1higher at 7.5
2. Incorrect income provided on the application. Many times we ask at the time of application, "How much gross income do you receive each month?" And to back it up we ask the applicant if they have their most recent check stubs available to look at so we can be sure. Of course they have those available but they still come up with crazy numbers. $5800 gross per month is NOT $7000. Why does this matter? Debt to Income Ratio or DTI. Same results as above.
3. Occupancy of property. Is the property owner occupied or investment? This is one of the number one forms of fraud and lenders are going after it with a vengeance even hiring college students to go knock on doors and take photos of license plates on cars in the driveway months after the closing date. Non-owner loans at higher LTV's (loan to value) generally cost 1o 2o the rate. If you have a client living in a $500,000 house and buying a $250,000 house as owner occupied they better have a very good reason AND a HUD1 from the sale of their first home.
4. Condition of property. If the property is not in "move in" condition most lenders are going to stop the loan right there unless it is a rehab loan. Some lenders, but not most, do allow repair escrows on properties which are missing plumbing fixtures, flooring, or have other MINOR repair needs.
5.Changes in job status. This one makes me want to scream. If your client has recently changed jobs but stayed in the same industry it shouldn't be a problem UNLESS they went from being a W2'd employee to being self employed. Most lenders want to see 2 years of self employment history. Worse is quitting the job after application and before closing. Had this one happen recently after 4 months of cleaning up credit and getting the couple to the closing table the lady just decided to quit her job. Of course we, the lender and the closing attorney all attempted to verify employment the day of the closing. She didn't work there anymore.
6. Missing a payment before closing. This one may not get you but often times it does if we pull credit just before closing. I've seen it too many times where a borrower went from a 680 score to a 615 score (for example) because they missed a credit card payment before the loan closed. The best thing that can happen is to get a loan at the same LTV with a higher rate. The worst thing is to lose the LTV and have a borrower have to find more cash for closing.
7. Applying for new credit. My agents say it, my loan specialists say it, my processors say it, and it's in the letter we send to every borrower in their RESPA package. Do not apply for new credit. How is it that they can't understand that buying a new truck or bass boat is applying for new credit? This one almost always kills the DTI by increasing monthly credit expenses and usually kills the deal ... dead.
8. Getting a separation from a spouse who is also on the loan. Yep - I've seen this one, too! I don't even think I need to explain what could (and usually does) happen here.

No matter how much we train and warn the applicants they're going to slip through from time to time. This is one place where the mortgage side and the sales side can really be on the same page AND on the same team.

So the FIRST order of business should be letting the mortgage side fully qualify the applicant and then finding a property which matches their needs. In so doing the applicant, who is now a client, should be constantly reminded that the loan parameters could change so don't buy anything you have to make payments on, don't charge your credit cards to the limit, don't change jobs or marital status, and pick a property acceptable to the loan program. Or - expect a different loan result!

Together Everyone Achieves More

-Ken

What: Real Estate Investor QuickStart Workshop
When: Tuesday, August 15th, 10:00 AM
Where: InnovaCenter, 2501 E Piedmont Road, Suite 203, Marietta, GA 30062
Who: Seasoned investors, those thinking about investing, real estate agents and brokers and YOU!

LIMITED SEATING - only a few seats available. This workshop is approximately 2.5 hours long.

$199 Fee Waived

How: Call RUSTI at 678-946-0100 to reserve your seat. NO WALK-INS PERMITTED for this workshop.

Keynote Speaker KEN COOK
Over 2000 real estate transactions since 2001 brings a lot of experience to the forum. You'll learn or review the following:

Basics of Real Estate Investing
Creating Your Business Model (You'll actually do this in the workshop)
Finding The Right Funding For Your Deal
Sourcing Properties - Using Professional Services for FREE
Property Management and Georgia Landlord Laws
Protecting Your Assets and Handling Tax Issues
1031 Exchanges
Acquiring Properties "Subject To" The Existing Loan
Improving the Value of Your Holdings
Determing Cash Flow Potential Prior To Making The Offer
Creating and Using LLC's, FLC's, and Trusts
and much much more.


Call RUSTI at 678-946-0100 to reserve your seat. NO WALK-INS PERMITTED for this workshop.