Interview with a Lender: Mortgage Insight From an Expert

Earlier this week, I had the pleasure of sitting down with a good friend and colleague of mine, Mike Simpson from New Penn Financial. I baited him with the promise of lunch, but I really wanted to pick his brain about mortgages. Don’t judge me. It was all in the name of educating you guys! Luckily he was a good sport and I got a lot of information to share with you today.

Jen and MIke

Jen: Tell us a little bit about yourself.

Mike: I am a native Delawarean born and raised in Kent County Delaware. I graduated with a Bachelor’s degree in Accounting and from Wesley College and have 15 years of experience in the financial services industry. I currently reside in Smyrna, DE with my wife and 3 beautiful children. My hobbies include going to sporting events, traveling and spending time with the kids.

Jen: Tell us about New Penn Financial.

Mike: New Penn Financial was established in 2008, amidst a challenging era for the real estate and mortgage industries, New Penn Financial® quickly became a major player in the new lending environment. The sea of change in the industry worked in our favor, allowing us to rapidly assemble a management team with decades of collective experience. New Penn has forged a national industry presence built on competitive interest rates, exceptional customer service, and healthy lending practices.

Jen: Many of our clients want to start looking at houses right away. It seems like the first logical step. Why is it important to get a pre-approval first?

Mike: It is important to get a pre approval prior to shopping for a home so you know exactly what price you qualify for as well as what type of mortgage. In order to put an offer in on the home of your dreams, you need a pre approval letter to accompany the offer.

Jen: What’s involved in getting a pre-approval? What type of information will you need?

Mike: Obtaining a pre approval is really simple. It consists of me interviewing the client and obtaining some basic information about their financial situation. The interview consists of information required to review the credit report. The information required are standard financial documents, including paystubs, tax returns and bank statements.

Jen: Sometimes, client credit isn’t where it needs to be. New Penn offers free credit enhancement, can you tell us about that?

Mike: This is one of my favorite things about the company I work for. If a customer has a credit score of 580 or above we do offer a credit enhancement service that is free of charge to the customer. This service offers solutions where we can rapidly increase the customers credit score vs. naturally waiting for the required changes to report.

Jen: When is credit enhancement not enough? Who should consider a credit repair service?

Mike: Our internal credit enhancement department is for those consumers that have a minimum credit score of 580. Although, the service is for customers with a 580 score or higher, I still would encourage everyone to speak with a mortgage professional first.

Jen: Once a client has a pre-approval, what are the next steps in the mortgage process?

Mike: Once a pre approval has been issued the next step is to do the fun part….find a house. Once a contract has been executed the real mortgage process starts. We then need to do the background work that really makes this transaction come to fruition. We work with several third parties, including an appraiser, title companies, inspectors and attorneys to protect the buyer. We collectively protect the buyer and ensure they are purchasing the quality of home that they are under contract to buy.

Jen: What can clients do to make the process go as smoothly as possible?

Mike: I always say that the buyer is the most important person in the process. It is extremely important that all information that is requested by the mortgage company is provided in an extremely urgent manner. Unfortunately, over recent years banks have “tightened” up and are required by law to document all we can to make sure we are making the most informed financial decisions.

Jen: What types of loans do you generate?

Mike: We are a full service mortgage company and have wide range of products. I pride myself on exceptional customer service and working for a company that is extremely competitive in the marketplace. Some of our products include:
– Fixed rate
– Adjustable rate
– Jumbo
– Conventional
– VA
– Home Improvement
– Harp Refinances

Jen: What are the advantages of working with New Penn Financial, and you in particular?

Mike: The primary advantage of working with me is I know the Delaware market and real estate laws. I also pride myself on being available when my customers need me, even if it is on the weekend or in the evenings.
I know the area and can serve as an additional resource / expert on the area. We offer extremely competitive interest rates and some closing cost assistance options.

I want to give a huge thanks to Mike and New Penn Financial for taking the time to sit down with us. Do you have any mortgage questions? Let us know in the comments below!

The 4 Most Common Types of Mortgages

You took a giant leap of faith and decided to buy a home. Congratulations! This is one of the most exciting purchases you’ll ever make. Unless you’re sitting on piles of cash, you’ll need to finance your home. There are several different types of mortgages, but all of the jargon can get confusing. Whatever you do, don’t underestimate the importance of your lender. They really know best. They sit through hours of mind-numbing classes, read a metric ton of mortgage information, and attend stuffy conferences in order to stay on top of the latest mortgage laws and trends. They do all of these things so that you, the clients, and we, the Realtors don’t have to. It’s so important to work with a lender you trust and lean on them for guidance. That being said, here’s a quick breakdown of the mortgage products we frequently work with.

401(K) 2013 / / CC BY-SA

VA Loans
VA Loans are government backed loans that are serviced by traditional banks. They’re great for buyers with little or no money to put down. In fact, VA financing is available with 0% down! You are eligible for a VA Loan if you or your spouse have served in the military. In addition to the usual documents, your lender will need proof of military service. If you’ve used a VA Loan product before, don’t despair. There is a common misconception that VA Loans can only be used once. This simply isn’t true. You can use them multiple times, up to a certain amount. Check with your lender for more information.

USDA Loans are also government backed. These too are serviced by traditional banks and can be had for 0% down. There are several eligibility requirements for USDA Loans. The property you purchase must be in a “rural” area. If you’re interested in using this type of loan, it’s relatively easy for your Realtor to find out if a particular address is eligible. There are multiple locations in Delaware that qualify. Don’t worry, they’re not all isolated from civilization in the middle of nowhere. You’d be surprised! Other requirements include a maximum income, a minimum credit score and a maximum DTI (Debt to Income Ratio). These requirements vary by location and during the pre-approval process, your lender will be able to tell you if you are eligible.

Another government backed loan, FHA loans are for First Time Buyers. Also serviced by traditional banks, these loans require a low down payment of 3.5%. Nobody likes difficult math, so let’s keep it simple:

FHA Down Payment Math
If you’ve owned a home in the past, you may still qualify for an FHA Loan. The term, “First Time Buyer” is relative. If you haven’t been a homeowner in the past 3 years and you meet the eligibility requirements, an FHA Loan is yours for the taking. A bit more lenient than USDA, FHA Loans still have credit score, DTI, income, and purchase price requirements. During the pre-approval process, your lender will let you know if you qualify.

The easiest type of loan to get, conventional loans are the way to go if you can’t meet the requirements of a government backed loan and have some money saved up. With down payments averaging around 20%, these loans require a heftier out-of-pocket amount. Ready for some more simple math?

Conventional Down  Payment Math
Because the buyer is putting down a significant portion of the purchase price, these loans are a little easier to get. Banks feel more confident when buyers have some skin in the game. As always, your lender will guide you through the process.

And there you have it: The quick and dirty facts on mortgages. If you thought that was boring, imagine how your lender feels!

As always, we’re here to help: If you have questions, or are ready to buy a home, contact us or leave a comment below!

Questions Answered...
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