If you’ve been around the financial planning business any length of time, you’ve likely run into the saying “The biggest risk is not taking one.” It is endemic to all financial instruments, indeed, all investments, that return is the reward for risk. It is axiomatic that the entity that takes risks gets the rewards. Generic …
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Lenders Holding Your Money Hostage
My lender told me that there is an application fee? He said an application fee of $250 and then we’ll need the appraisal fee and of course we’ll need an inspection. Does all this sound legit, is there always an application fee? If they are asking for upfront money, they are trying to hold your …
Games Lenders Play, Part I: Misleading Advertising to Get You to Call
I get the same junkmail and spam most of you folks do. They don’t know who I am when they send it out. It’s just that I know what’s going on behind the scenes with this stuff. So I thought I’d get out my calculator and deconstruct what’s going on with the advertisements I’ve gotten …
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Contingent Sales in a Buyer’s Market
I am buying a house. I signed the contract but the seller said contingent to sell until she buys new house? Is that normal? People do it. It’s smarter to avoid the stress and complications of dealing with both at once, but there’s nothing wrong with a contingency sale, so long as you agreed to …
Can You Get A Mortgage On a Condemned House?
The answer is a modified no. The same answer applies to property that is only structurally damaged, but not condemned. That condemnation is a matter of public record. I’ve seen any number of them while perusing title records. It shows up kind of prominently on the title commitment, which every regulated lender is going to …
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Altering the Mortgage Contract: The Lender trying To Add A Prepayment Penalty After the Fact
I recently closed a mortgage loan. The loan officer told me there would be no prepayment penalty. When the documents came there was none and the loan funded and closed. Two weeks later I got an e-mail stating some documents had been missed and we need to sign and return them. They contained a new …
“All Mortgage Money Comes From The Same Place”
This sentence is a textbook illustration of the most effective way to lie. Tell the truth, but not all of it. Not that I’m trying to coach habitual liars, but I am going to deconstruct this astoundingly dishonest claim that I keep encountering. It’s mostly used by less ethical loan officers trying to persuade someone …
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Issues with Family Transfers of Real Estate
We live in (A California city). In a 2 bedroom 1 bath home on approximately a 20,000 Sq. ft. lot. It is easily worth 500K to 600K with a current mortgage of $116,000. The mortgage/Title is in the name of my father and his wife 90% and myself and my wife with a 10% interest. …
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Investing Exclusively in Real Estate?
Is there any problems with having all your money in only real estate? That was a question I saw. The answer is YES there are problems! 1) No diversification. The real estate market tanks, like it has right now (originally written 2006), and you are hosed. The more so because of the leverage attaching to …
How Loan Providers Make Money
In an attempt to debunk some of the slanders that are floating around out there, this article is an itemization of how lenders and brokers make money on loans. The first method is obvious: Origination or discount points charged to the consumer. This is money that the person getting the loan is paying, or someone …