Mortgages: A Real Estate Agent’s Insight into Residential Lending Today – a 6 Credit Course Study in Real Estate Financing

This course will provide the real estate agent with the information they need to make sure that their purchasers are in the best position possible to obtain a mortgage loan.  It will update the agents as to recent programs and requirements in the mortgage industry that will allow more potential homebuyers to purchase a home. It will also equip them with the “inside scoop” as to what lenders are looking for with respect to income, assets, credit and appraisals.

Dates: March 3rd and March 10th
Time: 9:30 AM to 1:00 PM
Location: Conference Room, 120 Bloomingdale Road, White Plains, NY
Continuing Education Credits: 6

The course will cover all aspects of mortgage financing from pre-approvals to closing which will enable the agents to close deals quicker and more efficiently. We will uncover some of the “dirty little secrets” of mortgage lending that will help you help your clients. There will also be guest speakers who will discuss networking, sales techniques and specialized mortgage products. This is a must attend seminar for anyone who is serious about increasing their business this purchase season.

Keller Williams Seminar Invitation March 2015


Changes to FHA Mortgage Insurance Premiums January 2015

Great news for anybody who either has an FHA loan or is looking to buy a property with an FHA loan.

On January 26, 2015, which is just a few days from the taping of this video, the FHA will be lowering their Mortgage Insurance premiums. The current FHA Mortgage Insurance premium is 1.35%. It’s going to be lowered by 0.5%, so from currently 1.35% to 0.85%.

This represents the savings to people taking out FHA loans anywhere from $90 to $300 per month every month that you have that loan. So anybody has an FHA loan. you may be available to do a Streamline Refinance. A Streamline Refinance has very low documentation and has no closing cost so it can be a good deal. You’re automatically saving by half percent just by the reduction in the Mortgage Insurance. And if your rate is higher than the new rate you’ll also save money on the interest rate itself.

The FHA insures about one-fifth of all new U.S. mortgages and is a major provider of mortgages to first-time homebuyers. FHA loans allow for little as 3.5 percent downpayment with the minimum FICO score requirement of 580.

The lower premiums are going to enable 800,000 homeowners to save money on a refinance and it’s going to enable another 250,000 new homebuyers to become homeowners due to the lower payments.

So whether you’re first time homebuyer moving in to a new house or you want to refinance your existing FHA mortgage, the FHA loan program will let you do this with lower Mortgage Insurance.

If you’re interested in finding out how you can buy a house with an FHA loan or save hundreds of dollars per month on your current FHA loan, give Dan a call at (917) 575 -6977 or email at

So You Want to Buy a House in 2015 (or Refinance)?

If you are looking at the mild, dry weather this winter and the low interest rates and thinking “We should look into buying a house this year,” then this is for you. Likewise, if you have an interest rate above 4.25%; want to change from a 30 year fixed to a 15 year; have PMI on your loan but an increased house value; have an FHA loan with PMI of 1.35%; or want to convert an ARM to a fixed, this is for you too.

But, in order to get a new loan, there are a few things that you should know.  Though some of them are “self-evident” and would appear to the untrained eye to be common sense, trust me that they are not. I would say “don’t try these at home” but, if you don’t try these you will likely not be able to buy or to refinance your home!  To get a loan you need 3 basic things: good credit, sufficient income/employment and assets.

Credit Items:  If you have a mortgage on your house, pay it on time EVERY month. Just one late payment in any year can disqualify you from getting a loan for 12 months. Similarly, if you carry credit card balances, at least pay the minimum payment when it is due.  Having a late payment on your credit card can drop your score by 20-50 points in the months following that late payment.  To keep your credit score highest, keep the credit card balances to less than 25% of the credit limits. MP900405592

Do not incur additional debt while you are in the loan process.  That means, no new “toys,” furniture, trips, cars etc.  As one client told me when his initial loan approval was subsequently declined for leasing a new car, “you didn’t tell me NOT to lease a car.” So, though I never told him “TO” lease a car, I am telling you now not to do this (or at least not to do it before you check with your lender first).

The credit reports you get from the consumer credit reports are not the same credit reports that lenders use. As a result, the credit scores are generally overstated (sometimes significantly). Do not rely on these when applying for a loan. Have a credit report run by a professional (i.e. as noted above, do not try this at home).

Finally, one of my favorites, do NOT co-sign a loan for anybody at any time (other than student loans for a child). Co-signing is the same as signing as far as the banks are concerned.  If the loan payments are made late, or worse, not at all, it will destroy your credit for a very long time.  As Nancy Reagan would advise “Just say No.”

If you have credit issues, address them up front so they can be explained and dealt with early on.  If they exist, they will come up.  Not only that, but when the tax liens and collection accounts appear, we are not going to believe that “this is the first you are hearing of this.”

I Quit My Job Income/Employment:  Do not change (or worse) quit your job during the loan process (And Yes this happens. And No, it is not an isolated incident). If possible maintain a stable work history in the same job preferably or at least within the same line of work for the two year’s prior to applying for a mortgage loan. While there, find out if your employer has a procedure in place for verifying employment.  A lot of large companies and government entities have an online procedure that requires a code from the employer.

When you are asked to provide all of the pages of your tax returns, do not just send the first two pages or the random pages you feel like sending. We need to see all schedules to determine if there are other properties owned, unreimbursed business expenses, etc. Yes, we know that the tax returns are long yet we still need ALL pages.

If you are self-employed, find out what your tax returns show.  Do not tell us when we inquire about your income, “I don’t know what he (i.e. accountant) puts down.”  I know a lot of accountants and generally (though I won’t swear for all of them), “he puts down” the income and expenses based on the results of your business and the documentation that you provide to him.

Assets:  Cash may be king in life, but not in mortgage lending. All assets that will be used in the purchase of a house need to be located at a financial institution and “seasoned” in the account for at least 2 months.

Writing a Check

If you are getting a gift for some of the downpayment it needs to be from a blood relative. And, the source of the relative’s assets needs to be provided via a copy of their account statement. We understand that your uncle does not want you to see his bank statement. But, by making a gift, those assets are now part of the loan file and they need to be verified like
any other assets.

As with the tax returns, ALL pages of your bank statements mean “All pages.” We are aware that the last few pages may be blank, or contain printed text or have copies of your checks. But, we need these too. While we are at it, do not move money between your accounts without telling us first and unless absolutely needed for the downpayment or closing costs. Otherwise, we will need many more statements and possibly explanations. This applies especially to any large deposits that are made into your account during the two month’s prior to applying for a mortgage loan.

You are now ready to apply for a loan. If you follow the suggestions above, you will avoid 80-90% of the issues that arise during the loan process. Good luck.


“Don’t Buy a Home As an Investment” A Faulty Logic and Fuzzy Math

While I was reading the Sunday paper I came across this article from The Wall Street Journal and got intrigued by the title. Don’t Buy a Home as an Investment: After Costs, It Typically Doesn’t Yield Much. Think of It as a Place to Live.

I always enjoy the Wall Street Journal’s columns and generally agree with them. However, in this column listed above, the author came to his conclusion first and then tried to justify it. He neglected to include several important factors and then he discounted his extraordinary return on his Manhattan apartment for no apparent reason. Read more here: Don’t Buy a Home as an Investment


The investment return for real estate is not always as high as it looks. But, the beauty of this investment is the leverage that you get from mortgage financing. Photo courtesy of

Dear Mr. Clements:

As for your NJ house, while including some operating expenses, you failed to properly account for the cost of renting a similarly situated home for your 12 years of home ownership. You indicated that you were not counting the $106k in interest for this purpose. But, $106k/144 mos. would only give you a house rental of $736 per month (which is not even remotely possible).  In addition, you did not apply the same 25% “tax  benefit” to this that you did to the real estate taxes, which would lower it further. The adjusted real estate tax of $90k/144 or $625 per month should have been ADDED to the cost of housing as opposed to the cost of ownership and not been taking into account as to your investment return. Even adding $736 for interest and $625 for taxes would only give you $1,361 per month for rent which would not have covered a house rental in NJ which would have been $2,000-$3,000 per month.  If not left out of the analysis as it should have been, then $1,000 or so should have been added when looking at the value of living in a house, not subtracted.As for the actual investment in your house, it was NOT $165k unless you bought it for all cash, which I doubt.  You should only be including the original down payment you made (plus closing costs) and any principal payback that were paid in your 12 years of ownership.  So your investment would be reduced by the existing principal amount of your mortgage debt at closing (because this was not your money used for the investment, it was the bank’s).  So, though the payoff amount on your mortgage was not included (i.e. deducted from your investment) in your analysis, it should have been.  Only when taking these other factors into account can you determine your actual investment return.

As for your Manhattan apartment, it was a “home run” in any way you look at it. We can disagree as to the amount of the investment return, but not as to the overall picture of a huge gain in two years.  Again, was this apartment purchased for 100% cash?  You neglect to include this very important fact which affects your investment return (I.e. you did not invest the full purchase price of $570k plus $7k of closing costs, only a certain percent of this).  Therefore, your net sales price of $750k (i.e. $800k minus $50k in closing costs) gets compared to your investment (whatever amount that might have been). Once we know that number, we can determine the investment return.

All that said, I will agree that the investment return for real estate is not always as high as it looks. But, the beauty of this investment is the leverage that you get from mortgage financing (which is my business).  To fail to properly include this information on your analysis of your two home purchases is, if inadvertently omitted, at a minimum, a disservice to your readers. If it was done intentionally, then it is just another example of improper journalism where the facts were manipulated to support the conclusion.  I am hoping that it was the former. If so, please provide a follow up so that your readers can get a more complete picture of the situation.


Here’s a useful guide for your real estate investments in 2015.

A Better Outlook for the Home Mortgage Market in 2015


The real estate market in 2014, while better than the prior two years, was not an especially strong year as the market was hampered by stricter lending guidelines. The good news is that interest rates didn’t rise like many pundits predicted and are now actually at their low point for the year. Check the trends that are developing in 2015… (cont)

Networking Do’s and Don’ts for the New Year

As 2014 comes to a close, I wanted to provide some networking tips that will hopefully help make 2015 a more profitable year. Note that this list is not designed to be exhaustive or objective (i.e. these are my own tips) so feel free to disagree.

Networking Do's and Don'ts for the New Year

At a network event, be open to meeting everybody and anybody who is either introduced to you or who comes up to speak with you. You never know whom somebody knows or where the conversation will go.

I originally intended to write 4 do’s and 4 don’ts for the 8 days of Hanukkah. But, because I had more to say, I am now going to write 6 do’s and 6 don’t for the 12 days of Christmas.  But, whichever you celebrate (or if you celebrate both, neither or something else), these tips are designed for you!

The 6 Don’t (i.e. “Don’t be naughty”)

1. At a networking event, don’t hand out your card unless somebody requests it. If they want your card, they will ask for it. If not, it comes off pushy and desperate. Even better, create a v-card on your smart phone and offer to email or text it. Most people will say yes to that and appreciate that your information can be easily added to their Contacts.

2. If you meet somebody for the first time and get their card, contact them first and ask their permission before adding them to your mailing list. Don’t just collect cards and add people to your mailing list. At best, they will likely unsubscribe and think of you as a pushy salesperson.  At worst, they will note this as Spam which hurts your relationship with your email marketer and may be against the law unless you offer an Opt Out option.

3. (Note. This one, though timely, is going to be controversial.) Don’t send out the identical “canned” Holiday e-card to your entire mailing list.  These e-cards usually get deleted since they show almost no thought; are clearly a “lazy attempt” at getting your name in front of people and everybody knows they involve no effort when they are mass emailed. It is more effective to skip this entirely or send out a separate email or text message (even if you “cut and paste” the wording) to 25-100 people. Of course one or two personal lines is always the best.

4. When you meet someone at a networking event, try to find out about them and see how you can help them.  Don’t look at them as a sales opportunity and try to sell them your product or service at the event.  It is a bad form and doesn’t generally work. Find out what their “pain is” (i.e. what they need) and see how you can ease that pain through your contacts, advice or, sometimes, through your product or service if appropriate (e.g. they need help with social media and you are a LinkedIn expert).

5. Remember that the second part of Network is “work.” Have fun socializing with people at a networking event or holiday party and eating and drinking.  But, do not do too much of the latter.   The reason for attending the event is to try to grow your business in one way or another, not to load up on the food or booze.

6. Make introductions (even email introductions) that are valuable to both people not just the person being introduced. That way, people will see you as a good networking resource as opposed to just a “lead generator.”

The 6 Do’s (i.e. “Do be nice”)

  1. In your “elevator speech” at a networking meeting focus on what you are best at and what distinguishes your product or service. Try to convey why you are different and which area in your business is your sweet spot rather than trying to be all things to everyone (i.e. avoid the meaningless term “full service”).
  1. Send an email or make a phone call to thank everybody who you met in person or who sends you an article or invitation (See 5 below). First, it shows that you value their time and company.  Second, it gives you another opportunity to further the relationship.
  1. Ask people you meet and who you see at a networking event who they would like to meet. It demonstrates your willingness to help the person build his or her business and it also gives you the potential opportunity to make a referral. It is even better if you actually come up with a suggestion for a referral first based upon what the person told you since it reinforces that you were listening.
  1. At a network event, be open to meeting everybody and anybody who is either introduced to you or who comes up to speak with you. You never know whom somebody knows or where the conversation will go.  It is great to meet your natural referral sources. But focusing on them to the exclusion of somebody else can be shortsighted and often detrimental. (A shout out to the great networker Tony Celano for this one).
  1. If you see an interesting article or event that you think would be useful for one of your contacts, email a copy of it or an invitation to the event (as the case may be) with a short, personal note. They may not read it or attend, but they will appreciate you thinking of them.
  1. Try to be a valuable resource to your contact list, as well as their friends, relatives, etc. by trying to assist in any way possible even when there is no money to be made by assisting. Answer every question and respond to every inquiry. If one of your contacts sends you an email introduction, even if it is not somebody you are interested in meeting, respond to it anyway. There is no need to set up a meeting or a phone call but an email acknowledgment is required.

Have a great holiday season and a very Happy New Year. Feel free to follow me on Twitter for my frequent mortgage updates and news @mortgage_dan.


It is Possible to Buy a Home Now with Less than Perfect Credit and a Small Down Payment!

There’s a general feeling in the market that in order to get a mortgage now, a person has to have a credit score over 700 credit score; a very high income and a large down payment.  This can be difficult since the economy is still recovering so that high paying jobs are hard to come by. Also, due to the high cost of living, it is hard to save a lot of money in order to buy a house. But none of that is necessary.  So long as you have a job and a little money saved or available to use from some source, you can buy a home!

bright picture of man holding paper house

There are loans available through Fannie Mae and Freddie Mac, as well as the FHA which require much less of a down payment.

For example, on a Fannie Mae or a Freddie Mac loan you can put down as little as 5%, and on an FHA loan, you can put down as little as 3.5%. In addition, on an FHA loan, you can even get that 3.5% as a gift from a family member, as an advance from your employer and in various other ways. With respect to credit, you don’t need credit scores over 700 to qualify for a loan either. On a Fannie Mae and a Freddie Mac loan, you want to have at least a 660 credit score. On an FHA loan, you can qualify for standard interest rates with a credit score as low as 640.  You can even get an FHA loan, with slightly higher interest rates with credit scores as low as 580.

As for income, Fannie Mae and Freddie Mac are letting people spend up to 45% of their gross monthly income on their mortgage and debt payments. The mortgage part consists of principal and interest on the mortgage; real estate taxes; mortgage insurance (if applicable) and your home insurance. The other debt payments include car loans, student loans, credit cards, alimony and child support and any other debt that is payable monthly. On an FHA loan, we can lend to people who have debt to income ratios as high as 55%. That means 55% of your total gross income can be spent on your debt.

So, if you have a good job, are able to come up with some money for a down payment, you likely will be able to buy a home. Even if you had a bankruptcy, foreclosure or short sale in the past few years you may be eligible.  If you are dreaming of owning your own home, the best thing to do is to contact a reputable mortgage lender to discuss your financial situation.  They will be able to tell you if you can qualify for a loan now or, if not what you may need to do in the near future to make that happen. And, as you can probably imagine, if you do not know a good mortgage lender, I will be happy to refer you to one of the best! 🙂