Our Government has changed the way how you get your Denver Colorado Mortgage or Colorado Home loan effective January 1, 2010.  Sweeping changes in the Real Estate Settlement Procedures Act (RESPA) were made for the first time in over 30 years. 

 The U.S. Department of Housing and Urban Development (HUD) republished their Settlement Cost Booklet:  “Shopping for Your Home Loan”.   You are to be given this 49 page booklet within 3 days of your Denver Home Loan application by your Colorado Mortgage Broker or the mortgage Denver lending company.

 As in many cases when the Government tries to help and to protect you the consumer, they fall short in street smart common sense.  In the below video, I recommend what I believe to be a much more practical and powerful way for you to purchase your next Denver Colorado home.  

The next Denver Colorado Mortgage Tip will address why you need to have your own Colorado Home Loan Personal shopper for your next Denver Mortgage or Colorado home loan.

Today’s Denver Colorado Mortgage Tip is a recap what you should ask when selecting your Colorado Home Loan Broker.   Again, first check the Colorado DORA website,  to make sure that he/she is licensed.  These questions will help ensure that your next Denver Mortgage or Colorado home loan is not a “Bad” one.   

7  Must Ask Questions  - Mortgage Denver Broker

What is your rate for a FHA 30 year fixed loan?  It doesn’t matter what the loan program you ask about, but what the response is.  If the Mortgage Denver Broker gives you a rate without asking any questions, just thank him/her and hang up.  You want a “Professional” Colorado Home Loan Broker, not “An Order Taker”.

Do You Own Your Home?   This next question is if the Mortgage Denver Broker asked you a lot of questions to properly determine what your situation is and what your Denver or Colorado home loan goals are.  You want someone who has been through the process. 

How Long Have You Been Doing Denver Colorado Mortgages?  You want someone who has at least five years of experience to do your Denver mortgage. 

What Denver Home Loans Do You Offer and What Is Your Niche?  As Brokers, we usually have the same programs available with the exception of Government loans i.e. FHA/VA.  The reason for that is you have to get approved to offer these programs and some Denver mortgage companies won’t spend the time and money to get approved.   If they answer that they can do ALL loans and don’t have a niche, this is a Red Flag.  You want a Specialist.

Why Should I Get My Denver Mortgage or Colorado Home Loan From You?  You are looking for details of exactly how he operates and not just he will provide great service and/or you will get you the lowest rate.  Don’t fall for “BS”.

How Do You Determine When to Lock My Denver Colorado Mortgage or Colorado Home Loan?  Unless he immediately gives you specific tools that he uses, don’t trust or use him.  You should hear names like Mortgage Coach RATEWatch, RateAlert, Mortgage Market Guide, or RateLink. It’s not as important as to which service he uses, but that he is using at least one.  You want to protect yourself from the big rate swings and get a good rate.   

What Denver Mortgage or Colorado Home Loan Do You Recommend that I Get?   If you get only one recommendation, don’t use him.  You should get several options to choose from so you can achieve your financial goals and get the “Right” Denver Colorado Mortgage or Colorado Home Loan. 

The next Denver Colorado Mortgage Tip will address the new HUD “Shopping for Your Home Loan” booklet that is required to be given to you by your Mortgage Denver Broker prior to your Denver Colorado mortgage or Colorado home loan.

In today’s Denver CO Mortgage Tip, I want to further explain the difference between a Loan Officer from a Bank/Credit Union and Colorado Mortgage Brokers.   Yesterday I addressed Compensation and Loan Programs and how they can impact your next Denver mortgage or Colorado home loan. 

Before I get started, I want to restate the definitions for “Bank” and “Mortgage Broker”.  When I say “Bank”; I’m referring to any lending institution where you can walk in to get your Denver Colorado mortgage.  Examples would be Wells Fargo, Chase, etc.  On the other hand, Colorado Mortgage Brokers are individuals/firms that act an individual agent for the borrower and the lender.  I am a Denver Colorado Mortgage Broker.

Interest Rates:

Banks Usually Have Higher Rates:  Banks have large overhead expenses.  They have to build, maintain, and make loan payments on their own “Brick and Mortar” buildings.  This is very expensive.  Additionally, banks have to pay high utility bills, costly computer/information system, salaries for their employees, health care benefits and 401K plans, etc.  You’re getting the idea.  Banks have to pay this overhead every month so they start off in the “Red” each month.  The way for them to stay afloat is to make money by charging higher interests on Denver mortgages and Colorado home loans.  You already know how they nickel and dime you for their normal bank fees such as check return, ATM, insufficient funds charge, etc.  What’s funny is that they do all the TV commercials exposing all the “Other” Banks little tricks, but they do them as well. They pay big bucks on advertising and marketing to get their customers.  Unfortunately for you, when you get a higher interest rate on your Denver CO mortgage or Colorado home loan, you will pay tens of thousands of dollars more than you should over the life of your Denver home loan.

Colorado Mortgage Brokers Usually Have Lower Rates:  Most of the Denver Colorado Mortgage Brokers I know work from home.  I do.  We have very little overhead so unlike the Big Banks, Denver CO Mortgage Brokers don’t start off each month in the hole.  Now you can understand why we can provide lower interest rates on your Denver mortgage or Colorado home loan.  The Banks also don’t want you to know is that they depend upon us to help them stay in business. Since Banks don’t pay us a salary or any of our costs that are associated with bringing them a Denver mortgage or Colorado home loan, they pay us a yield spread premium (YSP).   I will talk about YSP in another post.  The bottom line is as a Denver Colorado Mortgage Broker, I will usually beat a Bank home loan interest rate by .25%.  Again over the life of the loan, that is lot money that you can save on your Denver home loan.   

 Qualifications:

Banks Have Their Own Standards.  When you go into a bank or credit union, the facility looks great and their employees are dressed very nicely.  Male employees are usually wearing a suit or the bare minimum a shirt and tie, right?  It all looks very professional.  The old saying that looks may be deceiving could be applicable here.  Banks can hire anyone that they want to be a Loan Officer.  They are responsible for training them.  Let me ask you a simple question about your own employment experiences when you got a new job.  How much training did you actually get?  Were your employers more interested in you jumping into your duties so you could start contributing to the bottom line of the company?  I believe that Banks are no different.   Also Banks, like most other businesses, will usually pay the least amount that they get away to get the job done.  My first job in the Denver mortgage and Colorado home loan industry, I was paid about $350 per loan.  It wasn’t a Bank, but the practice/concept is the same.  I soon realized that the lender was usually making $5,000+.  As I did my own research, I discovered that the lender was significantly overcharging their customers for their Denver mortgage or Colorado home loan.  I quickly resigned because I wouldn’t take advantage of people plus I wasn’t going to be used. 

Colorado Mortgage Brokers Have to Adhere to Higher Standards:  Colorado Mortgage Brokers had to become licensed almost two years ago in order to originate a Colorado home loan.  Bank/Credit Union Loan Officers don’t have to be licensed!  As a Denver CO Mortgage Broker, I had to: 

Be Fingerprinted

Pass a Background check by the Colorado Bureau Investigation

Secure a Surety Bond for Mortgage Broker for $25,000

Carry errors and omissions insurance for $300,000

Participate in 40 hours of education:  

•  
  1. A minimum of  19.5 hours in Federal and State Law
  2. A minimum of  16 hours in Mortgage 101
  3. A minimum of  4.5 hours in Business and Trade Practices

Pass a comprehensive two-part written Colorado Mortgage Licensing Exam

Adhere to Colorado Mortgage Broker current licensing requirements. 

If you go back to one of my first posts that talks about DORA, you will see that it isn’t easy to join the elite status of Colorado Mortgage Brokers.  That is why DORA inactivated 4,560 licenses in August.  Most people can’t meet these high requirements.  Again, Loan Officers haven’t had to go through this stringent licensing process.   Unfortunately they will also be exempt from most of the requirements of the SAFE National Mortgage Licensing Requirements that are effective in 2010.  I’ll address this in another post because you need to know these vital facts.  

One of my best referral sources as a Denver CO Mortgage Broker is the Banks.  When borrowers go to the Bank and they realize that the Loan Officer (a lot of times a young kid) didn’t have the foggiest idea of what he/she was doing or they didn’t have the loan program that they wanted, they called me. 

I bet the next time when you go into a Bank; you will look at their Loan Officers in a different light. The reason for these posts is that I not only want you to get the “Right” Denver Mortgage or Colorado home loan but also a “Good” one.

The next Denver CO Mortgage Tip will be a brief summary of these four major differences because they are extremely important when you start selecting who will help you with your Denver mortgage or Colorado home loan.

In today’s Denver CO Mortgage Tip, I want to explain the difference between a Loan Officer from a Bank and Colorado Mortgage Brokers.  Not knowing the difference could cost you a bundle on your next Denver Mortgage or Colorado Home Loan!

When I say “Bank”, I’m referring to any lending institution where you can walk in to get your Denver Colorado mortgage.  Examples would be Wells Fargo, Chase, Credit Union, etc.  On the other hand, Colorado Mortgage Brokers are individuals/firms that act an individual agent for the borrower and the lender.  I am a Denver Colorado Mortgage Broker.

 There are Four Major Differences, but I’ll only discuss two today.

 Compensation:

Banks pay their Loan Officers a Salary.  Banks emphasize that their loan officers are salaried and infer that they aren’t motivated by commissions so you are getting a good Denver Mortgage.  That is not necessary true.  There are very well known banks who purposely directed their high quality clients to their Subprime mortgage department so they could make a lot more money. 

 Colorado Mortgage Brokers are usually Commission Only.  Mortgage Brokers are not necessary dishonest or greedy because they are paid commissions.  Most of the Denver Colorado Mortgage Brokers that I know are mortgage brokers because they prefer their “independent” work and life style.  Let’s put in your terms.  “Have you ever had a “Bad” boss”?  If you are a manager or supervisor, “Have you gotten tired of having to deal with pity employee problems’?  Colorado Mortgage Brokers are just like you, they enjoy their freedom.  Their recommendation for your Denver Mortgage or Colorado home loan isn’t necessarily tainted because they are commissioned!  I’m sure that you probably saw all the negative headlines the past 2 years about the greedy banks and their overpaid CEOs and management staff who took advantage of their borrowers.  Need I say anymore?

 Loan Programs: 

Banks have Limited Mortgage Programs.  A Bank or Credit Union can only recommend a Denver Mortgage or Colorado Home Loan that they have.  If you don’t fit what they have, do you think that will tell you that and refer you elsewhere?  Or do think that they offer another in-house loan that they not be suited for you because they don’t want to lose your business?  I’ll let you be the judge of that. 

Colorado Mortgage Brokers have Unlimited Mortgage Programs.  Since we are “Independent”, Denver Colorado Mortgage Brokers can pick among the many lenders out there to get you the “Right” Denver Mortgage or Colorado Home Loan.  Lenders have different programs.  They will also many times have better interest rates than you would get from a bank.  Don’t you want a Denver Mortgage or Colorado home loan that fits your needs versus what the Bank can only offer you? 

Although these first two differences may not seem significant, they are.  I’m sure that you probably saw all the negative headlines the past 2 years about the greedy banks and their overpaid CEOs and staff who took advantage of their borrowers. They have taken Billions of dollars from the Government in “Bailout Funds” and still really haven’t changed their ways.  Need I say anymore about compensation?

My next Denver CO Mortgage Tip will address the other 2 major differences.  You will be able to see even more clearly how they can either save or cost you a lot of money on your Denver Mortgage or Colorado home loan.   You should be informed when you get your Denver Home Loan!

Today’s Denver CO Mortgage Tip is very important  for Denver mortgage seekers, but it also applies to anyone who is looking to get a Colorado home loan.   Potential Denver homebuyers and homeowners who want to buy or to refinance to take advantage of these historically low interest rates should not rush to apply online.   Unfortunately this is what happens.  This can be a HUGE mistake when you consider that your Denver mortgage or Colorado home loan will probably be your largest debt.  Due diligence should be performed first.   Or more simply put, check out who you are going to do business with.    When I say this, most people automatically think of the Better Business Bureau (BBB).   In most consumer situations that would be fine.  However when you are planning to get a Denver mortgage or a Colorado home loan, your first resource should be Colorado DORA. 

DORA stands for the Department of Regulatory Agencies.  It is located in Denver, Colorado.   All professions requiring a license are governed by DORA such as real estate agents, mortgage brokers, insurance agents, and even your hair stylist.  They establish and enforce licensing standards.  The Division of Real Estate of DORA wants you, the general public, to be protected from greedy, dishonest, and unethical real estate agents and mortgage brokers.  

For example on August 31, 2009, the Colorado DORA inactivated 4,560 Colorado Mortgage Broker licenses for failure to comply with education and testing requirements.  That was about 52% of ALL Colorado Mortgage Brokers!   I believe that the majority of the bad, fraudulent Denver Brokers have left the Colorado mortgage industry for easier prey.   The State of Colorado now has one of the toughest licensing standards for mortgage brokers in the country.  They are to be applauded because two years ago anyone could originate a Colorado home loan or mortgage.  Imagine ANYONE could have been putting you in a Denver mortgage that primarily benefited them, not you.  You wouldn’t have any idea that he/she was untrained, inexperienced, dishonest, unethical, greedy, or even a felon.   Your Denver mortgage is usually the important and largest debt that you will ever have.  Scary, isn’t it?

Here is your Denver CO Mortgage Financing Tip.  Prior to applying online for your Colorado home loan or giving any Denver Broker any information, go to the Colorado DORA website.  Check to see if the person has an active Colorado Mortgage Broker license.  The link is http://www.dora.state.co.us/real-estate/index.htm.    If you want to see how it works, type in my name, Randell Flood, or my Colorado Mortgage Broker License #MB100017910.  If the person isn’t licensed, do not do business with him/her and report it immediately to DORA at 303-894-2166.  We need your help to get rid of these con artists who are pretending to be Colorado Mortgage Brokers.  They are illegally doing Colorado home loans and are causing defaults on Denver mortgages due to their fraudulent lending. 

My next Denver CO Mortgage Tip will further explain why the local Colorado BBB should not be solely relied upon when getting advice for your Denver mortgage or Colorado home loan.