Hello everyone I am Brad, this is Mike Anderson with Reliance Mortgage and I want to spend a few minutes just talking to Mike about some of the issues that you hear about every day out there in the mortgage business. Mike, let me give you an example.
Mike: Are you ready for a bunch of horror stories?
Brad: Yeah, that is what I hear is out there too.
Mike: That is what most people feel like after they just got a mortgage done they feel like, actually a lot of people after they get a mortgage done, they can join the CIA or the FBI without any other checks.
Brad: Blood samples, checks…
Mike: Oh yeah, they are not there yet but they are getting there quite rapidly, let me just tell you.
Brad: Let’s say I am a guy that makes $70,000 on my gross income; I have a credit score of like 730-740. I have you know, a couple of credit cards, nothing major, they got $6,000-$7,000 on them. Take me through some of the steps that you would, would you advise somebody like that or would just take them straight to this loan to try to put it in a box?
Mike: Well let me ask you this question, how much money are you going to put down?
Brad: Well let’s say…
Mike: And also what price are we buying?
Brad: $225,000 and I would like to stick around 10% down if I can.
Mike: Okay, what I would tell you is, and you are not going to hear this from any other mortgage company I can assure you this. I would tell you to put 10% down, we will get a 10% second with those kind of credit scores and that kind of income and avoid mortgage insurance and what that does for you is it cuts your payment, which that is what you are looking for.
Mike: But also it let’s have a tax write off that you are not going to get with a PMI. It also lets you have, build equity in your home quicker because you are actually paying a note down rather than paying a PMI, which is….
Brad: That’s just there.
Mike: It is insurance is what it is, you can’t ever recover it. And then also let your own taxes and insurance, so it is a much better situation for you, put 10% or even 5% down and pay off that credit card debt.
Mike: And get at 15% second.
Brad: So that is one of those, I think you call them like an 80-10-10 or an 85….
Mike: Well let me ensure you this, why don’t you pick up your phone and call Ted Morsen and find out what they are offering….
Brad: Okay, we should do that.
Mike: None of them are going to offer it, alright.
Brad: That seems like a smart plan. And is there any penalty if I pay off that second lean quicker? If I pay that off quicker, it’s even better.
Mike: That’s another thing, a lot of people will accelerate their second lean note and pay it out over a 4-5 year period and once that is paid off, their first thing they will drop or their payment will drop maybe 15-20%…
Mike: So it is really a good deal. And I will tell you the reason Morsen don’t offer it, they have to get two loans approved rather than one, they also make less money on an 80-15-5 and a 8-10-10 than they do offer one loan, that is why don’t offer it.
Brad: That is Mike Anderson with Reliance Mortgage and this is Mike‘s Mortgage Minute.