Closing Cost Credits for NRCC, RCCs – Taxes, Transfer Tax, Insurance

Closing Cost Credits This is a reminder that Lenders, Sellers and Realtors can credit commissions or proceeds for closing costs. Closing cost credits are often necessary to help cash-starved borrowers close transactions, as total closing costs can easily exceed $10,000 for even inexpensive homes, depending on transfer taxes and other fees local to a particular […]Read More

Homes Do Not Need Appliances Unless “Built In”

Properties do not need to have appliances installed at close if they are not “built in” in most cases. Hence, many properties do not need stoves or refrigerators to be eligible for FHA or conventional financing. There are exceptions if the missing appliance creates a gaping hole in the counter area with wires exposed, as […]Read More

10 Lessons From 2014 For Self Improvement

I stole the below list from Lewis Howes – a business coach and podcast host whose business exploded last year. It is an excellent list that is well worth reading. Happy New Year from everyone at JVM Lending! My Top 10 Lessons from 2014 1. Be clear on your vision. Most of the problems people […]Read More

Using “Future Rents” to Qualify

This is a reminder that “Future Rents” can be used for income to help qualify for purchases. The “Rent” must be market rent, however; it cannot be over-inflated to augment income. Lenders order “rent surveys” from appraisers to verify market rents. Lenders will only use 75% of market rents for income for conventional financing, or […]Read More

Einstein Time vs. Newtonian Time; Too Busy? Realize You Control Time

One of our all-time favorite books is “The Big Leap.” It is an extraordinary book by a Stanford PhD about identifying “upper limits” that hold people back. We think every professional should read it. The book has another famous chapter all about time-management. The author drives home the point that we are entirely in control […]Read More

Mixed Use Condo Complexes with Commercial Space Are OK If…

Condo complexes can have commercial space and be eligible for financing as long as the commercial space comprises less than 25% of the square footage of the entire complex. If commercial space exceeds 25% of the overall space, we have a couple of portfolio lenders that will finance the projects. The rates and terms are […]Read More

Key Questions to Ask Your Lender – More Deals & Less Stress

Loan Officers are out in force right now, vying for Realtor-relationships. Here are key questions all Realtors should ask loan officers asking for business. A strong lender should reflect well on Realtors, helping to alleviate stress and close more transactions. 1. Database to manage all referrals? Skilled database input is essential to make sure no […]Read More

On-Line Lender Horror Story – Great Quote From Realtor

The below is a quote from a top Realtor whose borrower did NOT use JVM (b/c we told him the truth and not what he wanted to hear). “What a nightmare… The guy [the other lender] took over two weeks just to get the appraisal ordered. I think he was new and didn’t know what […]Read More

Hire An Assistant, So You Can Do What Pays & What You Love To Do

We work with numerous very busy Realtors right now. Some have assistants and most do not, unfortunately. Many Realtors without assistants are pulling their hair out right now with admin tasks, client follow-ups, inspections, vendor-conversations, and new leads (often ignored). In contrast, the Realtors we know with assistants are far more relaxed. They are able […]Read More

Great Body Language Podcast: Show Your Hands; Shake Hands

We once had a Realtor visit our office who was reluctant to shake hands, who kept his hands under the table, and who made very little eye-contact. He made us nervous and did very little business, needless to say. This is an obvious example of poor body language. Many JVM staff-members are exceedingly polite, and […]Read More

Letting Employee Go Is Usually Best for Employee; Way Better Off

Yesterday, I discussed DISC personality tests and a high “D” and high “I” employee that we tried to stuff into an admin role with poor results. That former employee still gets our Daily Comments and replied to me in good nature, knowing I was talking about him. He was good natured b/c he is a […]Read More

When The Smartest Employee Is Your Worst Employee? Wrong DISC

We rely heavily on “DISC” Personality tests for hiring. D = Decisiveness; I = Interactive; S = Stabilizing; C = Cautious. The tests weight employees’ personalities in the different categories. We had a super smart employee who was sky-high “D” and “I,” but his “S” and “C” were in the cellar. He could not have […]Read More

Managing “Cow Killers”

This is an old Russian Joke: There are two peasant farmers, and each has a cow that is skin and bones. Suddenly, one of the cows starts to gain weight and provide way more milk, making its owner prosperous. The farmer with the skinny cow becomes increasingly miserable, and a fairy comes to him and […]Read More

Debt Ratios Too High? Buy House As Investment; Not As Occupant

We have borrowers with substantial down payment funds and limited income who cannot qualify for the home they would like to purchase b/c their debt ratios are too high. A solution for these borrowers is to buy the house as an investment property (instead of an owner-occupied property). Buyers can put a renter in the […]Read More

5 Closest Friends = Your Future; Can’t Outperform Inner Circle

My wife Heejin and I are voracious consumers of podcasts and books of every type, and one message repeats over and over: “You will never outperform your inner circle; if you want to achieve more…improve your inner circle” (John Wooden). A corollary is: Show me your five closest friends; I will show you your future. […]Read More

Manufactured Housing – Fannie Mae/FHA Will Finance; Need Manuf. Comps

There are a surprisingly large number of “manufactured homes” in almost all areas. These are not to be confused with “mobile homes” that are not on a fixed foundation. Manufactured homes are homes that were constructed off-site in some manner but are now on a fixed/permanent foundation on a piece of land. Both Fannie Mae […]Read More

Rental Income = 75% of Gross Rent (Again)

For years, Fannie Mae and most lenders allowed borrowers to use 75% of the actual rent on a lease agreement for “qualifying income” (as long as the rent did not significantly exceed market rates). After the 2008 meltdown, Fannie tightened up and correlated only to the income reported on a Schedule E on a tax […]Read More

Myth: Self-employed Borrowers Need 2 Years of Income; 1 Year Often OK

We often have borrowers with ample income but who only recently became self-employed. For example, we have a young Realtor who is doing extremely well this year but had no self-employment income last year (in 2013). We also have many borrowers who go to work for companies in which they own over 25%, effectively making […]Read More

Don’t Close Out Credit Accounts or Trade Lines – Hurts Scores

We had a borrower yesterday who made $600,000 per year and he had almost no consumer debt or late payments…and his credit score was too low to get the Home Equity Line of Credit he desired. This stellar borrower’s score was too low b/c he closed out all of his credit cards and trade lines […]Read More

After Job Gap/Time Off – Need 6 Months Back On Job

We have many borrowers returning to work after extended periods of time off. We often see borrowers leave their jobs to work in other fields, or to take time off altogether (to take a break, raise kids, etc). When borrowers return to a W2, salaried position after an extended break of one year or more, […]Read More

Best “App” for Payments, Closing Costs & Net Sheets; Invaluable

I have been using my HP 12C Calculator since my first job at an investment bank in the late 1980s. With so many years of practice, I am extremely good at employing it to yield any and all numbers I might need. About four years ago, however, I found an app that rendered my skills […]Read More

Why We Don’t Share Written Loan Approvals w/ Borrowers & Realtors

On Monday, we had a borrower and Realtor refuse to remove a loan contingency until they had a chance to review our written loan approval. The written approval from the underwriter was extremely clean with almost no conditions; contingencies could have been removed without any concern. The problem with providing written approvals to borrowers and […]Read More

Hire “Brains and Character” Over Experience; Avoid “Crisis Hiring”

We have discovered over much trial and error that it is almost always better to hire “brains and character” over experience. By using a strong screening process and our training program, we figured out how to find associates who can use their aptitude and discipline to quickly pass up (in a matter of months) even […]Read More

“Rate Quotes” Are Worthless Prior to Getting In Contract; Misleading

We recently lost a borrower to another lender after spending an enormous amount of time educating her (this happens in our industry, and we will be fine). The borrower was steered to the other lender by a Realtor. The other lender told our borrower that he had lower rates. There are two issues with this: […]Read More

Hire a Personal Assistant! You Cannot Afford Not To

Heejin went to a store to buy candles on Saturday, and returned 45 minutes later exhausted from the experience. It was most amusing b/c running errands is not something she is good at; it is something our personal assistant normally does. I tell the above story to illuminate the need for a personal assistant. Most […]Read More

Bankruptcy Often Better Than Credit Counseling

One of our borrowers recently closed down her business and is now thinking about entering into a credit counseling program to pay off all of her credit card debt b/c she cannot afford her current payment obligations. It has been, however, our observation over the years that borrowers in this situation are far better off […]Read More

Hire High IQ AND High EQ; Employees = Best Friends

My excellent stepdaughter set up a charity golf tournament and used JVM’s staff to help with the admin. She was often at the office without me and she made this observation entirely on her own: “All of your employees are best friends; they obviously really like each other…” This is of course by design. We […]Read More

Does Your Business Need a New “Plan” or New “Thinking”

Heejin and I spent thousands last year on a renowned business coaching program, expecting to come up with specific and concrete business plans to take our business to the next level. That is not what we got at all (even though it was offered and available). The entire focus of the coaching program was actually […]Read More

Must Do Background Checks on Employees/Partners

I will never forget the day…when Heejin discovered that as much as $150,000 had been stolen from JVM Lending. Our bookkeeper at the time had difficulty explaining what happened to a large cash reserve we had, and this aroused Heejin’s suspicions. Upon further investigation, Heejin starting finding numerous checks that had clearly been forged, and […]Read More

School/College = Employment History; 30 Days on Job Is Enough

Lenders generally require a 2-year history of employment, as most people know. One exception to this involves borrowers who just graduated from college or trade school. If a borrower just got out of school, all we need to qualify for a mortgage is a diploma (or transcripts), a valid offer letter and 30 days of […]Read More

Alternative Credit: Phone Bill, Insurance; PG&E; etc.

On Monday, we mentioned a borrower who closed out all of his credit accounts to improve his credit which in fact hurt his credit. The only way the borrower can obtain mortgage financing now is by building what is called “Alternative Credit.” Alternative credit includes payment histories that are not normally shown on credit reports. […]Read More

Do Not Close Out Credit Cards; Just Pay Them Down

We recently pulled credit for a borrower (a Realtor no less) who had closed out all of his credit cards as part of his effort to clean up his credit and live a debt-free lifestyle. He is now probably six months to a year away from buying a home b/c having no credit cards not […]Read More

Why Realtors Need to Know Mortgage Basics; JVM Training

We discussed borrowers who own over 25% of their company being effectively “self-employed” on Monday. This issue came to light with one of our borrowers recently b/c the borrower let his Realtors (a team) know about his ownership interest; b/c the Realtors know lending guidelines, they had the borrower immediately contact us. This literally saved […]Read More

Own Over 25% of Company? You’re Self-Employed; Need 2 Yrs History

A borrower of ours, who has been a W2 wage earner for years, told us over the weekend that his current employer, where he started three weeks ago, is 50% owned by him. He was unaware that this would be a problem b/c he is still paid a wage-earner salary, with taxes withheld, in the […]Read More

3 Phrases to NEVER Say – Cause Stress Every Time

Here is a great stress management tip from a Forbes article I liked b/c I am so guilty of violating the tip. Never utter the phrases: (1) “I’m swamped;” (2) “I’m so busy;” and (3) “I don’t have time for that.” According to the author, we strive to validate our perceptions of reality, even if […]Read More

Almost Anybody Can Be a Relative for “Gifting” Purposes

We repeat this often b/c such a large proportion of our borrowers purchase properties with “gift funds” for down payments and closing costs. A “donor” or a person gifting funds can be almost anybody, including an aunt, an uncle, a sibling, a parent, or a grandparent. Lenders do not verify the authenticity of the relationship. […]Read More

Don’t Close Out Credit Cards; Open Accounts = Higher Scores

We recently pulled credit for a highly responsible borrower who makes great money, has no debt and pays cash for everything. The issue? He closed out all of his credit accounts, and cannot qualify for mortgage financing. Lenders require at least two to three “open” trade-lines or accounts on a credit report. Trade-lines include credit […]Read More

Unlimited Rate, Payment, Closing Cost Scenarios = Our Job

We had borrowers leave their loan officer and come to us (they found us on YELP) a few months ago because their loan officer was too busy to provide them with payment and closing cost scenarios. As they shopped for properties, their needs, qualifications and price ranges were changing, and as a result, they needed […]Read More

Closing Cost Credits Can = 6%; 2% for Investors; Commissions Too

Sellers can credit up to 6% of the sales price, in most cases, as a credit for ALL closing costs – including non-recurring and recurring fees. This includes transfer taxes. Closing cost credits should just be for “closing costs” and not for “non-recurring costs” only. Many people think closing cost credits cannot exceed 3%, but […]Read More

“Gross Income” For DTI Calculations; Adjusting W4; Tax Benefits

Most people know that lenders only look at “Gross Income” when evaluating Debt-to-Income (DTI) ratios. In other words, lenders evaluate a borrower’s income before taxes are taken out. This sometimes makes no sense to borrowers b/c the payment they qualify for leaves them so little extra cash left over after they make their payment…IF they […]Read More

Non-Citizens Can Get FHA/Conv. Financing; VISAs are OK

Borrowers living in the U.S. do not need to be U.S. Citizens to get FHA and Conventional Financing. Visas of a variety of types are acceptable. The most common acceptable Visas are those in the H-series (H1b, etc.). “B,” “L,” “G,” and “O” series Visas are also acceptable. Non-citizens with “Green Cards” or “permanent residency” […]Read More

Mass “Disclosures” – What To Look For?

All mortgage lenders force borrowers to read, digest and sign an enormous quantity of “disclosures,” closing documents, and/or forms full of boilerplate and terms. There is often more than borrowers are capable of reading. We have “stock emails” that describe all the pertinent aspects of these disclosures, but we mainly advise borrowers to just check […]Read More

Great Business Podcast: 10x Talk; Gratitude/Appreciation Essential

We love podcasts (via iTunes) and listen to and recommend many, but there is one business podcast that we especially love: “10x Talk” with Dan Sullivan. It is called “10x Talk” b/c his focus is on changing your mind-set so your business will grow by “10x.” Mr. Sullivan is a hard-nosed business coach who has […]Read More

Non-Taxable Income Can Be Grossed Up by 25% to Qualify; Child Support and Social Security

This is a reminder that lenders allow borrowers receiving non-taxable income to “gross it up” by 25% for qualifying purposes in most cases. Non-taxable income most commonly includes Social Security income and/or Child Support income. What Is Non-taxable Income? Non-taxable income is any form of income that is paid to an individual where the gross […]Read More

Using “Realtor Commission” As Gift for Down Payment

Realtors writing offers for relatives can credit their commissions as “gifts” for down payments. We have a pre-approved borrower right now with limited down payment funds. Her daughter is a Realtor, however, and she is going to “gift” her commission to her Mother to be used towards most of the FHA down payment. Realtors can […]Read More

Condo in Litigation? Not a Deal Killer

We closed a transaction last week on a condominium with a Homeowners Association (HOA) that was involved in litigation. The litigation had to do with some mold in a building that was not attached to our subject property’s building in the same complex. In any case, if litigation does not involve the structural integrity of […]Read More

Beware of “2106 Expenses” and Rookie Loan Officers

2106 Expenses are expenses that salaried/W2 employees can take against their income if the expenses are considered “trade or business related.” These expenses can include items for cars, cell phones, clothing, travel, entertainment, etc. These are not to be confused with the expenses that a self-employed or 1099 contractor shows on a Schedule C. We […]Read More

Rookies & No Short Sale Seasoning & 2nd Job Seasoning

We met First Time Home Buyers over the weekend who had been woefully misinformed by other lenders, driving home our point about the need for proper training and education in the lending arena. Below are a few things all loan officers should remember. No Seasoning is required after a short sale if there were no […]Read More