MortgagesRock-Q&A

QUESTIONS & ANSWERS

1) How do Mortgage Brokers get their business? How can I?

Many brokers are subscribing to lead generation companies. Most of the leads are called over and over again by other brokers that purchase the same leads. Real time leads are also being sought out by brokers but can be quite pricey. Some brokers use telemarketing to get new business. The lists have to be scrubbed to protect them against the Do-Not-Call Act. The very best form of obtaining new business is referrals which requires no investment and yields the most profit since there is no money spent on the leads that you get. Networking is your key to success. Think of all of the people that you know that can refer you business. Think of the people that you know that may have the need to borrow money themselves. Give out business cards every day and make yourself known. Share your affiliation with everyone in your circle of family and friends. Constantly work those circles! When you hear people (could be strangers) talk about mortgages, keep your "antenna's" up and throw yourself at them. There is no possible way to fail if you keep at it. Your success will be based on your determination and willingness to stick with it!

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2) Why should consumers go to Discount Funding Associates as opposed to a local bank?

Mortgage Brokers are "power agents" of each particular lender that they are on board with. We get our rates wholesale and therefore, we can offer our customers better rates than the retail banks. As an originator with Discount Funding Associates, be proud that your company can match or beat the rate on the street! Did you know that we can even obtain mortgages for your prospects that have been rejected time and time again for reasons such as bad credit and/or the inability to prove income? We have access to every known mortgage product needed to facilitate a transaction. This does not guarantee an approval 100% of the time but being on board with 200 lenders gives us a variety of options to choose from. As mortgage brokers, we deal with the same underwriters in banks, appraisers, title companies and closing agents which gives us the power to perform with precision and confidence. Loans close fast and efficiently. Pricing, product, service and speed are what makes Discount Funding Associates a mortgage leader since 1979. Your clientele will thank you over and over again for helping to achieve their goals and dreams.

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3) How long does it typically take to close on a Refinance going through Discount Funding Associates?

Since we have the ability to perform at rapid speed, it is very possible to close and fund within 10 business days from time of application. It depends on just how fast borrowers are willing to cooperate and supply us with conditions needed to close. The average time it typically takes to close on a refinance is 20 business days. Here are examples of how we are able to "shake and bake." We can arrange to have an appraiser inspect a property within 24-48 hours. The completed appraisal report can be emailed to us within 48 hours from time of inspection. At DFA, we can order a title report and have it by email within 2-3 business days. As soon as we have a borrowers authorization, payoffs and verifications are ordered immediately. Insurance endorsements usually take one day to receive. Documentation that we request from borrowers can be sent to us using our overnight accounts, by fax, messenger or regular mail. If you being the originator have the ability to collect it in person and bring it to us, the loan process can go that much quicker, Once we have everything in our file, we then overnight or scan the file to the bank and get a clear to close almost immediately.

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4) How long does it typically take to close on a Purchase going through Discount Funding Associates?

Many of the steps it takes to close on a refinance, are true with a purchase as well. What usually takes longer on a purchase is the engineers report, signing of the sales contract by buyers and sellers, commitment by lender (10 business days on average) and the sellers ability to vacate the property. Typically, a closing from time of application on a purchase is about 60 days. That same feat can be accomplished by DFA within 30 days if all parties are willing. Speed is always required in either case since the loan has to close within the "lock period."

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5) What is a 1003?

The 1003 is the Uniform Residential Loan Application that is to be completed by both the mortgage broker and lending institution by means of phone, in person or mail. Click here to view the 1003.

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6) What does Prepayment Penalty mean?

A prepayment penalty is paid to the lender if the loan is paid off before its maturity or if extra payments are made on the loan. Sometimes defined as "hard" or "soft," where a hard penalty is automatic if the loan is paid off early or if extra payments are made at any time or for any amount whatsover. A soft penalty only lasts for a couple of years and may allow extra payments on the loan not to exceed a certain amount.

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7) What is a Gift of Equity?

A sale price below market value, where the difference is a gift from the sellers to the buyers. Such gifts are usually between family members. Lenders will usually allow the gift to count as a down payment.

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8) What is a Seller's Concession?

Typically, it is exemplified by money back at closing to cover closing costs. Most banks will allow a seller to give back up to 6 percent to the buyer to cover closing costs. In order for a seller to grant a purchaser a seller's concession, the value of the home must appraise higher than the originally agreed upon price and the sales price in the contract must be raised as well in order to cover the concession.

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9) A lender looks at number of trade lines. What does that mean?

Trade lines are different credit accounts listed on your credit report.The number of credit cards, lines of credit and other types of credit ("Trade Lines") you have available will affect your score. If you have a lot of trade lines, this may decrease your score because of the risk that you might not be able to pay off all of your accounts, and this may affect your ability to pay off your mortgage loan. You may wish to consider canceling credit cards you do not use regularly or choosing 2-4 cards to use and canceling the rest. If you close or cancel an account voluntarily it will not have a negative effect on your credit score. You may wish to reconsider accepting "pre-approved" offers for credit cards, or if you accept an offer, perhaps you should cancel another credit card. On the other hand, if you have no trade lines, this will likely decrease your score. Lenders generally want to see that you have some available credit and that you can handle your credit wisely.

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10) What is APR and how is it calculated?

The annual percentage rate (APR) is the cost of a loan, expressed as a yearly interest rate. The APR is usually greater than the interest rate of the home loan because it includes closing costs, points, mortgage insurance and other fees associated with the loan. A federal regulation requires that you be informed of your loan's APR within three days of application.
APR is one way to compare loan programs offered by different lenders. It is calculated by using a standard formula:

Add closing costs to the loan amount to get an adjusted balance
Find the monthly payment on the adjusted balance
Using the original loan amount, determine the interest rate that would result in the monthly payment found in step 2.

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11) How are Construction Loans given?

Think of a construction loan as a line of credit with your loan amount as the maximum amount of funds available. As the project progresses, the contractor will submit invoices with the construction draw to cover costs incurred with various suppliers and subcontractors. Construction loan disbursals are generally handled one of two ways; by your bank or by a third party. Payment and lien waivers are distributed by the bank directly to subcontractors and suppliers based on the draw submitted by your general contractor, supported by original invoices and approved by you. This allows more flexibility for the borrower and a quicker payment for the contractor. Both you and the Bank should monitor the draw requests and be sure the bills are paid promptly and appropriate lien waivers signed.

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12) What does NINA stand for?

It stands for No Income No Asset. Not only do you not state your employment and income but also, you don't state your asset with this feature to qualify for the loan!

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13) What is Negative Amortization?

Negative amortization occurs with some adjustable-rate mortgage (ARM) loans when the payment amount is insufficient to cover the interest due on the loan. Any interest not covered by payment is deferred and added to the principal balance.

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14) What is a Piggy back loan?

A Piggy-Back Loan is designed to eliminate PMI. Two loans are closed concurrently - an 80% 1st mortgage and a 10%, 15% or 20% 2nd mortgage. This allows the borrower to purchase a property with just 10%, 5% or 0% down. On an 80/10/10 (10% down), the rate on the 1st mortgage is the same as if the borrower puts 20% down. On an 80/15/5 (5% down), the rates are slightly higher on both the 1st and 2nd mortgages. On an 80/20 (no money down), the rates are even higher. The 80/10/10 is the most popular financing package for Jumbo purchases.

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15) What exactly is Payment Shock?
A scenario in which monthly mortgage payments on an adjustable rate mortgage (ARM) rise so high that the borrower may not be able to afford the payments. Consumer protection guidelines regarding extremely low initial "teaser" rates, lifetime ceilings, and annual caps are designed to prevent payment shock.

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16) What is a Sub-Prime loan?
A subprime loan is the extension of credit to a person with a damaged credit history who is considered to be a high risk borrower. Subprime loans have higher—sometimes much higher—than average interest rates. Subprime lenders reduce their risk in making loans by charging borrowers a higher interest rate and sometimes additional fees.

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17) What does the term "Hard Money" mean?
A Hard Money Loan is one that simply loans out hard money. These loans generally don’t need a lot of fancy paperwork and are easier to obtain than conventional bank loans. Hard Money loans are procured through private means in most cases. To obtain this type of loan you must have plenty of equity in a parcel of real estate or you won’t receive the loan. The lender is not going to want to lend you money if you have tons of debt or past credit problems without collateral. Having equity in real estate assures the lender that if you can’t pay back the loan he/she will always get their money back. These loans are very helpful to those in credit and debt trouble, however, they will end up having to pay higher interest rates, but at least they can get the loan. It is also helpful to those who just need a quick loan since hard money loans don’t require much paperwork or time.
The usual LTV (Loan To Value) ratio on Hard Money Loans is 50-60% max. This means if you own a piece of property with Fair-Market-Value of $100,000 you can borrow $50,000-60,000 against the real estate. The LTV on raw land or non-income producing pieces of land are 33%. It can go up to 40-50% for commercial properties, and for construction and land development. Hard Money rates are generally between 12-24% and your prospects will likely have to pay a point or points. We have private investors that will make Hard Money Loans in cases where it is needed.

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18) What is Par or Par Pricing?
With par pricing, rates are quoted at zero points. The reason that interest at par is higher than interest with points is that points are merely a form of prepaid interest. If you work the numbers over a 30-year period the cost of both loans is largely the same. While both points and monthly interest costs are likely to be fully deductible, most people do not keep loans for 30 years.

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19) What does "Pull-Through Rate" mean?
Our pull-through rate is a percentage that measures the dollar volume of loans that we close versus the dollar volume of loans that we contract for using the Best Efforts offering. The more loans that we close and fund and deliver, the higher our pull-through percentage will be. Any loan that has expired or been withdrawn will adversely affect our pull-through rate. Freddie Mac will consider our pull-through rate, and its consistency in different market conditions, when determining our pricing.

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20) What is a Bridge Loan?
A "bridge loan" is financing secured on one's current home, a home typically listed for sale.The bridge loan is used to finance the purchase of the second home and is paid off when the first home sells.

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21) What is the meaning of Lis Pendens (LP)?
A lis penden is a formal notice that litigation is pending over a home or real estate property. An action has been filed in a court of law before the foreclosure process begins. Lis pendens is Latin for suit pending.

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22) What is a Survey?
A Map made by a licensed surveyor who measures land and charts its boundaries, improvements and relationship to the property surrounding it.

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23) What is an AUS?
"Automated Underwriting Service" that communicates with the underwriting departments of the different lenders in the network. Automated Underwriting runs many different loan scenarios that mimics loan package submissions to lenders and allows Loan Agents to quickly compare lenders products against each other in a real time setting. A comprehensive evaluation of all lenders products can be completed on behalf of Plan Members within a matter of hours.

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24) What does Bi-Weekly Mortgage mean and how does it work?
A mortgage which requires 1/2 the normal monthly payment every two weeks. Over the course of the year, 26 half payments are made which is equivalent to 13 full mortgage payments. As a result of this extra payment the loan amortizes much faster than a loan with normal monthly payments.

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25) What constitutes a Commercial Mortgage?
A Commercial Mortgage is a mortgage that is secured on a property that is mainly used for business purposes or one that is zoned commercial. There are lenders that will combine the property and actual business but most of the lenders that Discount Funding Associates utilizes are ones that strictly lend mortgage money based on the borrower's credit/property rent roll and market value. Terms on commercial loans usually adjust in increments of 3, 5, 7 or 10 years before converting to a fixed rate for the remainder of the term. Some commercial loan terms are fixed for the life of the loan.

Commercial Property Types

Listed below is a partial list of properties that require commercial financing.

Multi family Retail	Retail
Garden Apartments Hi-Rise Apartments Mid-Rise Apartments Low/Mod Income Student Apartments Senior Apartments Underlying Coop	Regional Enclosed Strip Center Outlet Mall Free Standing Single Tenant Regional Unenclosed
Office	Healthcare
Single Tenant Hi-Rise Tower Mid-Rise Office Office Over Retail	Congregate Living Nursing Home Rehabilitation Ambulatory Care
Office
Heavy Manufacturing Light Manufacturing Warehouse/Distribution Owner Occupied Multi-Tenant Self Storage Special Purpose

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26) What does the term "Alt A" refer to?
Alt-A lending refers to borrowers with good credit who don't fit standard guidelines. Alt-A lending programs include, but are not limited to, the following:

1.No-income verification (NIV)
2.No-income/no-asset verification (NINA)
3.No-income/no-asset/no-employment verification
4.Stated-income programs
5.Limited documentation and/or no documentation

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27) Which states does Discount Funding Associates currently do business in?
DFA is currently licensed in NY, NJ, CT, PA, MA, RI, NC, FL, IA, IN, WA, CA & AK.

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28) How can I become a Mortgage Originator with Discount Funding Associates?
If you have not spoken to Andrew Liebowitz and are interested in joining DFA, please feel free to click on our Mortgage Originator Registration Form. Upon receipt, we will send you an Contractor/Employment Application.
We wish you much success and look forward to a long profitable relationship. Click here to sign up.