Broker Testimonial Transcript

John Van Campen, Senior Mortgage Consultant

First time buyers are looking to get into homes younger and younger. We'll take a look at the downpayment, the closing cost, rate the whole package and we'll get that to you in just a little bit. When I started fifteen or sixteen years ago, I heard the phrase "Well, we'll go home and save for two years" - twenty times a week. Don't hear that anymore. There's a hundred percent financing available and a lot of the programs are very good. First time buyer programs, principal and interest, reduced interest rates, mortgage insurance programs that are allowing them to get in with minimal if any money down, without any catches or hitches.

I do think that the non-traditional loans have contributed to foreclosures; I think our up and down economy over the last few years, nationwide, has contributed to that as well. I think that some of the unique products such as - I don't want to say unique, but specialty products such as interest onlys or negative amortizations are allowing people to feel that they can qualify for more home, maybe biting off a little more than they can chew, and then when that rate goes to a principal in interest or to a regular amortization and their payment goes up two, three, four hundred dollars a month it puts them in a pretty bad bind. 

Mortgage Insurance to me is a tool, and that's one of the things that I try to express to all my client base. Loan programs are a tool, mortgage insurance is a tool, piggyback loans, second mortgages, they're all tools. The reason my clients would choose Mortgage Insurance over a combo loan or another alternative is because it's the best overall value. Not just amount of money needed up front, what's the monthly payment going to be? What are the options available comparatively speaking? And we try to look at all of them, because to predetermine or to be prejudiced towards one or the other you're going to miss and leave something on the table. 

Generally speaking, I find that a single-premium MI on a ninety-five percent loan is very often competitive with a piggyback option. The interest rates on the second mortgages have been rising substantially over the last four years. Prime's moved from four to eight and a quarter in the last four years. So the piggyback is not as cost effective as a single premium. 

Most clients feel like "I don't want to pay mortgage insurance," and I'm like "Well, let's look at the total value again. Here's your interest rate without mortgage insurance, or with a lender paying it. Here's your rate with you paying it. Here's your monthly premium, here's your single premium." Give them an example with PMI, give them an 80/20, give them FHA, give them all the different options. We recently had one where, with the MI was eighty-two dollars a month cheaper than an 80/20 on a hundred and thirty-thousand dollar house. My biggest thing and biggest phrase to everybody is "be flexible." Let's look at all of the options, look at the best value, and figure out which one is going to be best for you and your family.