Nick Pakulla - Mortgage Lender Loan Officer in MD, DC, VA

Happy New Year!  Hope you had a great Holiday and were able to enjoy time with your family. 

As the 2012 spring market is getting started off with pre-approvals and buyer inquiries, there were several changes (and re-changes) near the end of 2011 that may have led to some confusion and will likely impact your buyers.  Below is a current recap of loan limits, minimum down payments, and maximum seller contributions for all loan options available.

Mortgage rates continue to stay at all time lows!  Let’s make 2012 the best year yet!

Location           Loan Limit       Min. Down Payment     Max. Closing Concessions

Below 417,000 Conventional:

Baltimore          $417,000           5%                               3%

DC                   $417,000           5%                               3%

Investment        $417,000           20%                              2%

Above 417,000 High-Balance Conventional:

Baltimore          $494,500           10%                              6%

DC                   $625,500           10%                             6%

Investment        -                       35%                              2%

10% Down Jumbo ** Using First Place Bank Specific Second Mortgage Product:

Baltimore          $900,000           10%                              6%

DC                   $1,100,000        10%                              6%

FHA Loans:

Baltimore          $560,000           3.5%                            6%

DC                   $729,750           3.5%                             6%

VA:

Howard             $478,400           0%                               ~4%

Baltimore          $494,500           0%                               ~4%

DC                   $625,500           0%                               ~4%

*VA is now very specific per county, please consult the VA County loan limit site: http://www.benefits.va.gov/homeloans/loan_limits.asp

** borrowers can purchase above the VA loan limits by putting down 25% of the difference of the maximum loan limit and the sales price.

First Place Bank’s 80/10/10 loan program was recently mentioned in the Wall Street Journal Online as an example of a creative way to assist buyers (and sellers) above the lowering Fannie Mae county loan limits! 

September 16, 2011, Will Expiring Loan Limits Kill My Sale?  By June Fletcher. Link: http://on.wsj.com/rd289k

Q. My house is for sale for $878,000. I have already dropped the price three times, and can't afford to drop it any lower. I am very worried about the upcoming expiration of conforming loan limits, and what that will do to the pool of buyers that can get a mortgage to buy my house. Your thoughts?  --Arlington, Va.

A. “… buyers could find a lender who will provide a piggyback loan that allows a lower down payment. Such lenders generally are community or niche banks that keep such loans in their own portfolios. For instance, in your area, First Place Bank is offering an 80/10/10 loan that requires a 10% minimum down payment. The bank makes a first loan up to the conventional limit in tandem with a second.” 

Thank you for helping to spread the word!

This is the Wells Fargo, Bank of America large banking institution type.  These banks originate loans and hold them on their books or sell them in large pools to Fannie Mae, Freddie Mac, private investors, etc.  All parts of the loan process stay within the company - origination, processing, underwriting, closing, and funding.  These banks often follow the centralized approach, ie: where all underwriters are housed in the same location - which is different fromthe Loan Officer's location. Cons: With large mortgage banks Often when walking into your bank, or calling the 1800 number you may or may not be dealing with a skilled loan officer who is familiar with specifics in your local area, lending rules and regulations are different by state and by county.  No one can be an expert in every state.  This fact compiled with a centralized underwriting model where the loan officer has very little personal relationship with processing and underwriting staff can make "getting deals done" very difficult.  From what I hear from the Realtor community and several "rescue" deals I have personally saved, it is common to have a settlement delayed at one of these larger institutions.  Pros:     Mortgage banks tend to have the ability to keep loans on their books, and therefore can offer unique loan portfolio loan programs (one that comes to mind is the 100% Doctor financing mortgage).

photo by ricardodiaz11

Cons:

Often when you call up a credit union for pre-approval you deal with whoever answers your call, there is not one specific person assigned to your case.  In my experience the staff are not trained to analyze a borrowers information for an approval, they do not review documentation, and simply issue boiler plate approval letters.  This is usually followed with major issues during the underwriting processes that are not brought up until last minute a few days before closing.  (If you want to see for yourself check out USAA's reviews: 

https://www.usaa.com/inet/pages/bank_loan_new_mortgage#reviewTab ** make sure you got to reviews and sort by date, the 1-star reviews are enough for anyone in my opinion to avoid these institutions)

Pros:    

Credit unions often hold loans in their own portfolio and can sometimes lend when other banks cannot.

Cons:

Mortgage Brokers are relying on the wholesale institution for a large majority of the loan process.  Personal relationship with the underwriting staff at several institutions is very difficult.  There is a large lack of control over the loan process.

Pros:

Mortgage brokers may have access to unique loan programs offered by several lending institutions.  

Cons:

Correspondents face one main concern, they cannot hold any loans on their books and face risk when underwriting every file.  If several loans are required to be bought back by the end investor this can cause their ability to fund loans to be limited in the future.  Therefore, the correspondent must follow very strict guidelines in order to prevent buy backs from occurring.  

Pros:

Everything is controlled under one roof - underwriting, processing, and closing.  Depending on the size this can be done in the same office, or for large correspondents they also follow a centralized approach similar to the big banks.  Correspondent lenders may have access to unique loan programs as they generally work with several end investors.

Community Banks can vary in size from very small to regional, not all of them provide a high level of service with regards to their mortgage products.  First Place Bank is a small Community Bank, and we have the ability to hold loans on our books and also sell to investors.  All of the underwriting, processing, and closing is done under one roof - in the same office.   Cons: The only con I can think of is that we may not have access to programs for borrowers who are completely outside of the box, ie: poor credit for example. Pros: This is the best of all of the lending options, big enough to hold loans on the books, offer unique portfolio products, and still small enough to work with other warehouse lenders as a correspondent.  Everything is controlled under one roof - underwriting, processing, and closing - and this is all completed in-office.  A personal relationship with underwriting and processing staff enables loans to always close on time.  We have the ability to close loans in 2 weeks.  Additionally, since we are a bank our bank has unique portfolio loan products, such as second mortgages, 80/10/10's, and bridge loans.  Our appraisal process uses a local rotation of selected appraisers to ensure you receive a quality transaction throughout.

Yes I am biased, but in my opinion Community Banks, and ours in specific is one of the best mortgage operations in the Country.  Ultimately, as a consumer you are concerned about getting a fair deal, and settling your new home on-time.  You don't want to be stuck sleeping in a hotel room for a week because settlement was delayed.  There is no excuse for a delayed settlement, and with our Community Banking model we are one of the only places to go to guarantee this does not happen.  This is why we commonly get out closing packages out 1-2 weeks before settlement, while other lenders strive for the day before.

The quality of the Loan Officer or Broker also matters greatly.  You could have a perfect bank / Broker but a bad Loan Officer and have a horrible experience, or the worst bank / Broker and a great Loan Officer and have a fantastic experience....  Bottom line, check with a few different types of lenders, get some recommendations, and see which one you feel most comfortable with, in my opinion for the highest level of service every time the choice is pretty clear.

How to get a jumbo mortgage with a 10% low down payment in Maryland, DC, or Virginia