The Smooth Loan Process #2010-12

How Many Loan Officers Does It Take To Screw In A Light Bulb? 

Insert your punch line here: _________. Seriously, did you ever think about how many people are involved in closing a home loan? I find it quite astonishing. This may give us some insight as to why Real Estate is such an important part of our economy. 

Let's say that today is the day you want to buy a house. Here's the list of all of the people that will have their hands on your transaction in one way or another (not in any particular order).

1. Loan Officer
2. Realtor
3. Attorney (depending on your State)
4. Loan Processor or Assistant LO
5. Real Estate Transaction Coordinator
6. Escrow Officer
7. Title Examiner
8. Insurance Agent
9. Home Inspector
10. Termite Inspector
11. Appraiser
12. Bank Coordinator
13. Lock Desk
14. Underwriter
15. Quality Control Auditor
16. Document Preparer
17. Funder
18. Courier
19. All of the assistants and Staff for all of the above

Depending on the type of transaction and property, there could be more. If any one of these people does not perform adequately or better in their area, your transaction will not be smooth. Did you know there were so many people involved?

The Smooth Loan Process lesson for today: A good Loan Officer and a good Realtor will work together to coordinate all of the other services required for your real estate transaction.

Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com

The Smooth Loan Process #2010-11

5% Down Conventional - Don't Bother!

Over the past couple of days, I have been asked quite a bit if we'll ever see 95% financing on conventional loans again in Arizona. There are two answers to this question. First, it never went away. Second, who cares? It's no good anyway.

Let's take our time machine back to April of 2008. This is when conventional financing really began to make big changes. The changes were not so much with Fannie and Freddie on the loan end of things. The changes were with the Mortgage Insurance (MI) companies. We don't talk about MI too often, but the MI companies were also very hard hit by the real estate market. Every loan with MI that goes to foreclosure means that the MI company pays a claim to the bank that foreclosed. That claim can be as much as 40% of the loan amount.

So with all the foreclosures, the MI companies tightened their guidelines and raised their rates to reduce their exposure in the market. One of those tighter guidelines was maximum financing of 90% in the Foreclosure Axis of Evil. Also known as Arizona, California, Florida and Nevada. In all of this, there is one rogue MI company that has continued to do business in the Axis of Evil at 95% for certain "preferred" lenders (ourselves included). Recently, the preferred lender list was expanded a bit.

If 95% conventional financing has always been available, then why aren't we doing it? Well, it doesn't make sense. By raising their rates, the MI companies have pretty much made sure that we wont use them. If you compare the monthly payment for a conventional loan with 5% down to an FHA loan at the same rate with 3.5% down, the FHA loan will have a lower payment. The mortgage insurance on a 95% conventional is almost double of what FHA currently charges. So with less money out of pocket and a lower payment, FHA is typically my recommendation.

The one and only scenario that the 95% conventional makes sense would be if your purchase price exceeds the maximum FHA loan limit for your County, but less than the conforming loan limit of $417,000.

The Smooth Loan Process Lesson for today: If your down payment is less than 10% of the purchase price, do your loan FHA.

Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com

The Smooth Loan Process #2010-10

Simple Mistake or Rip-off?
I have found a disturbing trend with the payment calculations for those of you that are in Adjustable Rate Mortgages that I want to make you all aware of. First, let's go back in time a bit.

We all remember 2005. Star Wars Episode III was the top movie. Battlestar Galactica was the top tv show (yes, I'm a sci-fi geek too). And everybody refinanced or purchased with an adjustable rate mortgage. Well, not everybody but nearly 50% of the home loans closed in 2005 were adjustable rates. Most of those ARM's were 5 year arms that had a fixed rate for the first five years, then the rate can adjust once per year.

Now its 2010 and all of these 5 year ARM's will be adjusting soon. For most of us with the adjustable, we did not expect to still be in the same house we purchased in 2005. Or we expected that there would be enough equity to refinance to a fixed rate. The burst of the housing bubble took care of that plan. We can't refinance because there's no equity. We can't sell because there's no equity. And we can't afford a higher payment if the interest rate goes up. So what do we do now?

Nothing! The good news in all of this is that for most ARM's, you will see your interest rate decrease. The new interest rate on your loan is determined by adding the index on your loan to the margin. Your loan most likely (but not all) uses the London Inter-Bank Offer Rate (LIBOR) as its index. At the time I am writing this, the LIBOR is about 0.875%. Your margin was determined by your lender when you took the loan. It is basically the profit that your mortgage company will earn on your loan. Most margins range from 2.0% to 3.0%. The index changes daily. The margin is always fixed.

So let's say your adjustable has a margin of 2.25% and the current index is 0.875%. Your new rate would be 3.125%. Your rate probably started at about 5.125% in 2005 so you've just seen your rate decrease by 2%. Very good, for now. We'll have to worry about this again next year because the rate will adjust annually from this point forward.

You will receive a letter from your current mortgage company that will state what your current rate and new rate will be when the rate change goes into affect. Read this letter very carefully! We have found that on a few occasions the rate was not adjusted correctly. If you dont catch this, you could be paying more for your mortgage than you actually owe.

One of our clients received such a letter the other day. It said that his current rate is 5.125%. The letter also says that the Index is .905% and the margin is 2.25% so the new rate would be 5.125%. Wait a minute... I'm no math wizard (actually, I am) but .905 + 2.25 equals 3.155. Not 5.125. When the client called his mortgage servicer, their response was "oh, I guess we made a mistake". Needless to say, our client is suspicious. How many of us did not catch this mistake?

The Smooth Loan Process lesson for today: If your adjustable rate loan has changed recently, the rate should have gone down and double check the notice that your rate has changed against your closing documents to make sure it's been done correctly.

Bonus Lesson: Today, the most popular show on TV is House (according to the internet) and the top movie is Avatar.

Harold Perkins
Galaxy Lending Group LLC
602-595-1233
Harold@HaroldPerkins.com

The Smooth Loan Process #2010-09

The HAMP Modification Program Could Have Unintended Consequences

By now, we have all heard of the Home Affordable Modification Program (HAMP). Essentially, the program gives incentive to the Banks to modify the home loans to make the payments lower and more affordable for the homeowners. But there's a catch for the homeowner (and there's always a catch).

HAMP requires a three month "trial period" where the homeowner will make a reduced payment. The homeowner must make the payments during the trial period on time in order to be eligible for the final modification. Here's the catch: During the trial period, your mortgage will be reported on your credit as "paying under a partial payment agreement". In other words, not paid as agreed. This will have the negative affect of about 100 points to your credit score. Here's the spicy part. If your modification is not approved and made permanent, the trial period payments will be reported as late and you will be past due for the difference between your trial period payment and your regular payment.

According to the Wall Street Journal, to date there have been about 900,000 applications for HAMP modification since the programs inception in April 2009. Only 7% of those modification applications have been approved. That means about 840,000 households are worse off now than before they applied for the modification. The unintended consequence of all of this is that many of the 840,000 households that did not qualify for the modification would have qualified to refinance or purchase something more affordable but now, their credit has suffered to the point that they can no longer qualify for a new loan.

The spirit of HAMP was to be an option for people that have the intention of keeping their home to live in but have had an adverse change in financial circumstances. Used any other way, HAMP can be disastrous for your credit.

The Smooth Loan Process lesson for today: Get all of the facts and educate yourself before applying for any new loan or modification program.

Harold Perkins
Galaxy Lending Group
602-595-1233
Harold@HaroldPerkins.com

The Smooth Loan Process #2010-08

When Should I Lock My Rate?

For those of you that know me, you know that I have my favorite catch phrases (my friends call them Harold-isms). A lot of them are not appropriate for this blog, but one of my favorites is "lock 'em if you got 'em". The bond and treasury markets have been so volatile for the past couple of years that from one day to the next, there's no way to know what the rates are going to do. True, all of us want the best rate possible. But it's gut wrenching to have had the opportunity to lock at 5.0% but end up with 5.5% because you gambled that the rate would be 4.875%. The advice I give is that if you are happy with the rate on the day you get your purchase offer accepted, lock in and don't look back. In the end, you'll feel better.

What is a rate lock? Think of it as a contract between you and your lender for a certain rate, for a certain period of time at a certain cost. Customarily, rate locks are for 30 calendar days but can range anywhere from 10 to 90 days. The longer the lock period, the higher the cost will be. For example, a rate that costs one point to lock for 30 days could cost 1.5 points to lock for 45 days or going the other way, .5 points to lock for 15 days. If your loan does not close by the expiration of the lock, then you are subject to higher costs if rates worsened since you originally locked. Rate locks are specific to the property and to the borrower. If you had locked in your rate and decided to cancel your purchase contract, your lock would not transfer to the new house.

Also, your lock is only good for the loan program that you have applied for. For example, if you locked your rate for a Conventional loan, but then had to switch your loan to FHA, you would also have to re-lock at the current market conditions. Finally, always have a signed lock in agreement of some kind with your lender. If the rate lock is a contract, wouldn't you want a copy of the contract?

The Smooth Loan Process lesson for today: Lock 'em if you got 'em

Harold Perkins
Galaxy Lending Group
602-595-1233
Harold@HaroldPerkins.com

The Smooth Loan Process #2010-07

Changes Coming to FHA Financing FHA financing for home loans has been the bright spot in the Real Estate market for the past few years. In 2005, less than one percent of the loans we closed were FHA. Today it's about 40 percent of the loans we close. This is due in part to the rise in FHA loan limits coupled with the decline in property values. In 2005, the FHA loan limit for Maricopa County, AZ was $273,500 but the median home price in my zip code was $350,000 (according to azcentral.com). Today, our County's FHA loan limit is $346,250 and the median home price is $275,000. That's a good combination for buyers. Another reason for the rise of FHA is the fall of the three Russian Sisters. SISA, NIVA and NINA. Stated Income Stated Assets, No Income Verified Asset and the biggest of the sisters, No Income No Asset. We'll talk about them in another episode. The increase in FHA loan volume also comes with an increase in problems for FHA so HUD is making changes to reduce their risk.

• -The Upfront MIP will increase from 1.75% to 2.25%. The upfront MIP is charged on every FHA loan. This is part of where HUD gets the money to pay claims to the banks that have FHA loans that have defaulted. The charge is a percentage of the loan amount and is usually financed back in to the loan. The Upfront MIP can vary depending on loan purpose and loan to value. A credit score requirement of 580 will be required. This is a big change for FHA but it kind of doesn't matter. Up to now, FHA had no minimum credit score requirement. In today's world, if the borrowers credit score is below 620, the loan would not have been approved anyway. Realistically, at least a 640 score is ideal. FHA borrower with less than 580 will be required to put 10% down. Again, FHA will allow it but finding a bank to fund that loan will be challenging.
• -Seller contributions for closing costs will reduce from 6% to 3% of the sales price.
• -FHA appraisals must be HVCC compliant beginning February 15, 2010. We'll no longer have direct contact with the appraiser. The appraisal will be ordered through a third party management company that will assign an appraiser to the transaction. The appraisal process will be completely independent of the Lenders and the Realtors. We're getting used to this on the Conventional side of things. The transition should not be too bad for FHA Except for the appraisals, these changes have not gone into affect yet but they are coming soon.

Overall, these changes are not too bad either. If we remember back several years, this is how FHA used to be. Who should take an FHA loan? The typical FHA borrower has some are all of these characteristics: -Down payment of less than 20% of the sales price -Getting help for down payment from family -Needs a co-signer to help with income -Limited or short credit history -Loan amounts less than $346,250 -Refinances with loan to value over 80% -Bankruptcy discharged more than two years or currently in Chapter 13 Bankruptcy.
The Smooth Loan Process lesson for today: FHA loans are good. Just be sure to keep up with the changes.

Harold Perkins
Galaxy Lending Group
602-595-1233
Harold@HaroldPerkins.com

The Smooth Loan Process #2010-06

Origination Fee or No Origination Fee? We've all gotten the emails from the African Prince who needs our help to access his millions of dollars in a Trust account, right? It's easy, you just send some to him and he'll send back your cut of the millions. What could possibly go wrong? Origination fees can be the same thing (on a much smaller scale, of course). What is an origination fee and should you pay an origination fee for your home loan? The origination fee is what it sounds like. It's your lender's charge for their services in originating your home loan. Customarily, it is one percent of the loan amount but it can vary depending on the loan scenario and market conditions on the day you lock in your rate. So let's say you are given two good faith estimates (GFE) for the purchase of a primary residence. Both are 30 year fixed rate loans. The first GFE has a note rate of 5.0% and a 1% origination fee. The other is at 5.25% with 0 origination fee. Which option is better? Depends on how long you plan to stay in the loan. You will find that at five years, the difference in monthly payment between the two rates will be equal to the cost of the origination fee. So if you planned to sell the home in less than five years, the higher rate and lower cost option is best. Conversely, if this is the last house you will ever purchase, take the lower rate because it pays off in the long run. What about paying more than 1% to get an even lower rate? Maybe. You will find that more you pay in points, the less bang you get for your buck. Usually, a .25% reduction in rate costs 1% of the loan amount. But a .5% reduction in rate could cost 2.5% of the loan amount. That would make the break even point 7 years instead of 5. Also, the shorter the term of your loan, the less it will make sense to pay for a lower interest rate. The break even point for a .25% lower rate on a 15 year loan is 7 years. Almost half of the term of the entire loan! If you are taking an adjustable rate loan (yes, people still do that), then you want to make sure you break even before the first adjustment to the rate happens. Sometimes, it is just not an option to take your loan with no origination fee. If you are purchasing an investment property, plan on paying an origination fee. The fees that are charged by Fannie Mae and Freddie Mac for investment properties are practically impossible to cover through the interest rate making it necessary to charge the origination fees. Also, if your credit score is below 700 for conventional or 640 for FHA, plan on an origination fee. The Smooth Loan Process lesson for today: Depending on your situation, the lowest rate may not be the best. Or the lowest cost might not be the best. Look at all of your options before you decide. Bonus Lesson: Don't send money to the African Prince! Harold Perkins The Mortgage Advantage 480-831-1588 Harold@HaroldPerkins.com

HUD Waives FHA 90 Day Rule

On Friday, HUD announced that they would temporarily waive the 90 day seasoning rule for FHA buyers. This is the link to the waiver from the HUD website. http://bit.ly/5Umop5 The waiver goes in to effect on February 1, 2010 for one year.The 90 day seasoning rule had prevented a buyer from purchasing a home with an FHA loan if the seller had not owned the property for at least 90 days prior to the buyer's purchase contract being executed. There were exceptions for Bank owned properties, relocation companies and inherited properties.The biggest benefit will be for the "fix and flip" investors. They will now be able to market their properties sooner to FHA buyers which is currently the largest segment of the market. HUD has determined (finally!) that these investors are good for the market. Of course, there are restrictions. For example, an increase in sales price from the seller to the buyer of more than 20% will require a second appraisal and documentation of the improvements that were done to justify the increase in sales price. Also, the transaction must be an arms length transaction. Please call, email or stay tuned for more information. The announcement was just made on Friday. There are not lender specific guidelines yet. Harold Perkins The Mortgage Advantage 480-831-1588 Harold@HaroldPerkins.com

The Smooth Loan Process #2010-05

How Do I Pick My Mortgage Lender? There are many Loan Officers at many mortgage companies to choose from. Most are good. Some are bad. Very few are out to cheat you (and they'll get their comeuppance in the end). So how do you pick your Loan Officer? Clearly, you'll want to make a good decision on who you use for what will probably be the largest purchase you ever make. With a few exceptions, every mortgage lender has the same products. For example, an FHA loan at Lender "A" is the same as Lender "B" or Bank "C". Granted, there are lender specific guidelines to every loan program, but that's another episode. In general, the products are the same regardless of where you get it. Your first step in picking your Loan Officer (LO) should be picking up the phone and talking to your friends and family. Who did they use when they purchased their home? How strongly would they recommend their LO? Did he do a good job? A referral from somebody who has actually worked the person they are recommending gives you the best chance for success in your own transaction. That LO has already proved himself and doing a good job doesn't happen on accident. It takes work. If you don't have any friends or family that can refer you to a LO, then ask your Realtor. Your Realtor has a working relationship with a LO. The longer a Realtor and LO have worked together, the better. That will tell you that the LO has consistently done a good job for as long as the two have worked together. The referral is about trust. Talk to the people you trust and find out who they trust. Once you get that referral, your work is not done yet. If it's practical, make an appointment to meet your LO. You will learn a lot about who your going to be working with just by spending about an hour in completing your loan application. Did your LO answer his phone when you called? Or return your call promptly if he couldn't answer? When you meet your LO, did he explain the different options you have for financing? Did he explain why he recommended a certain loan program? Did he provide you a Good Faith Estimate? Did you feel comfortable? If the answer to all of those questions is yes, then you're probably going to be fine. What did you find when you searched your Loan Officer's name in Google? Facebook? LinkedIn? Don't worry about MySpace. Nobody uses that garbage. One of the least important things in determining who to use for your loan is the interest rate or fees. Yeah, that's right. I said it. Seriously, a lender that consistently charges a higher rate or higher fees than the rest of the market is not going to get referral business anyway. I'm very nice, but I can't charge a higher interest rate because of it. Part of doing a good job is providing competitive rates and fees for the services that are being provided. In all likelihood, you would not be able to answer yes to any of the questions from the above paragraph if you were being charged a significantly higher interest rate or fees for your loan. I'm not saying that you should not check around to make sure your getting a fair rate, but the lowest is not always the best. I have friends that blame their Loan Officer (it wasn't me) for their divorce. They found him by calling on a radio ad. They say that the delays in closing which lead to hotel and other expenses put too much of a strain on their relationship. I asked why they didn't use someone else when the loan started going bad. They admitted the LO did not seem trustworthy but the interest rate he quoted was .125% lower than the other quotes they had gotten so they stayed with him. I didn't have the heart to point out that they spent more on hotels, eating out and divorce attorney fees than that .125% in rate saved them. This example is a little extreme. I suspect their were other issues with their marriage, but had they gotten a referral from someone they trusted, they might still be married now. The Smooth Loan Process lesson for today: Work with a Loan Officer you trust, or get a referral for a Loan Officer from someone you trust. Harold Perkins The Mortgage Advantage 480-831-1588 Harold@HaroldPerkins.com

The Smooth Loan Process #2010-04

Why Do You Care Where the Money Comes From? One of the biggest challenges in getting your final approval for your home loan can be documenting the source of your funds for your down payment. This can be a area of frustration for the buyer and Loan Officer alike. If you have purchased a home before, your Loan Officer may have asked you about every little piddly deposit in your checking account. Why do we do this? I think my daughter, Claire puts it best when she yells at one her brothers for getting them in trouble. "You ruined it for all of us! Thanks a lot!" The source of the down payment is a very good indication as to whether or not the buyer will actually live in the property that is being purchased. Owner occupied properties get better terms on the loan than non-owner occupied properties or investment properties. The terms are better for owner occupied because statistics show that those loans are less likely to go to foreclosure. So the people that "ruined it for all of us" are the people that intended to purchase a rental property but want the better interest rate and lower down payment so they use someone else to take the financing for the property. That other person (or straw buyer) gets the down payment money from the investor to close and never moves into the house. Later, if the investor cannot make the payments, the house goes to foreclosure. No problem for the investor because the loan is not on his credit but the bank is stuck with a foreclosed property. For the record, I'm against this. So we have to ask you for not just the balances in your bank account, but the full transaction history of your bank accounts for the past 60 days. If there are unusual or large deposits into the account, we have to document where it came from. Of course, payroll and tax refunds are always okay. But let's say your parents are helping you with your down payment. We'll not only have to document that they gave you the money, but also that they had the money to give you. That means looking at the parent's bank statement to see if they had any large deposits and if they did, document the source of their deposit. Actually, it's not as bad as it sounds. As long as you are not a straw buyer, you will not have any problems with documenting the source of your down payment. There are a few sources of down payment that will make your home loan very challenging. The shoe box of cash in the closet is a problem. There's no way to properly document cash like that. Taking a picture of it for the underwriter does not work (I've tried). If you're thinking of buying a house and you have cash for your down payment, get that money in the bank. After it's been in the bank for 60 days, no questions asked. Taking cash off of a credit card is no good either. That's an unsecured loan and is not acceptable for down payment. Other types of loans are just fine though. A loan against your 401k, car or home equity is perfectly fine. Of course, we'll have to document that too. The Smooth Loan Process lesson for today: Be prepared to document the source of your down payment. Harold Perkins The Mortgage Advantage 480-831-1588 Harold@HaroldPerkins.com

The Smooth Loan Process #2010-03

Why Is Your Credit Score Different Than Mine? Most of us are familiar with the three major credit bureaus. Experian, Equifax and Transunion. Most of us are equally familiar with credit scores. After all, it is our report card for grown ups. But did you know that your credit score might be different depending on who pulls your credit? I had a client a few months back that had his credit pulled three times in one day. Once by me, once by him and once by another bank. We all pulled different credit scores! Here's why: The consumer credit report that you can get on your own from an online credit report company like uses a different scale than creditors use. The consumer credit report ranges from 400 at the bottom to 900 or sometimes 1000 at the top depending on the company. The scoring scale for creditors starts at 300 and only goes up to 850. So the exact same credit could get a 700 score on one report, but only 650 on the other. Confusing? Wait, it gets worse. The credit bureaus have different versions of the scoring modules that determine the score. For example, Transunion has at least four versions of the FICO score (FICO is the brand name of the scoring module). Each creditor can choose which version of the FICO score they want to use. It is generally accepted that FICO Classic version 04 is used for mortgages, but not always. There is a big bank out there that uses version 02 for their loans. The difference between the two can be about 25 points on your score. That can be very expensive for your loan if you are knocked down a credit tier because of the scoring module that gets used. So, if you're pulling your own credit report because you want to know your credit score, take it with a grain of salt. It might be different when your loan officer pulls your credit. The Smooth Loan Process Lesson for today is that the most important thing about credit is to make sure the data on your credit report is correct. If there is incorrect data, we can work together to correct it and raise your score (but that's another episode). Harold Perkins The Mortgage Advantage 480-831-1588 harold@aztma.com

The Smooth Loan Process #2010-02

Can I Quit My Job Before We Close? "Is it bad if I quit my job before we close on our loan?" I get this question from borrowers more often than I would expect. I suppose that for those of us in the business, this is kind of a no-brainer but the question comes up enough that I feel like giving the answer and the reason. Yes, it's bad. The reason is that the lender wants a reasonable expectation that the income used for qualifying is likely to continue. On most loans, we'll have to contact the employer to verify that the borrower is still an active employee on the day of funding and closing the loan. Usually, this is done by phone but it can also be done in writing. So if we find out that you have quit, put in your notice or took a leave of absence, the loan is not going to fund. The lender will also verify your start date with the company to make sure there is a proper employment history, but that's another episode. Maybe my sense of humor is off (after all, I am a mortgage nerd), but I think some of the situations we have had with a lack of employment at closing are really funny. Here are some of the responses I've gotten when I asked the buyer why their employer says they are no longer employed: - "I know I got fired, but they owe me two weeks vacation. We close in less than two weeks, so what's the difference?" - "Oh...I didn't think that mattered." - "You said I was pre-approved. I thought that meant I could do whatever I wanted." - " I know you want me to get my job back, but that's not gonna happen. Not the way I quit!" By the way, in all of the cases, the buyers were able to close on their home loans. We just had to verify employment for their new jobs. The Smooth Loan Process lesson for today: Try to avoid changes in your employment status before you close on your home. If there is a change, let your Loan Officer know right away. Harold Perkins The Mortgage Advantage 480-831-1588 Harold@aztma.com

The Smooth Loan Process #2010-01

You Didn't Ask Me if I Bought a Timeshare Every once in a while, there is a loan application that has little hidden surprises. And, I don't mean the happy surprises like a better interest rate or lower closing costs. Sometimes, the surprises are a little on the ridiculous side of things. This one is one my favorites (and I can't make this stuff up): They were first time buyers with a very limited credit history and very little money to work with for down payment. The credit scores were a little bit on the low side, but could be improved by paying down the balance on a credit card by just a couple hundred dollars. The higher credit score would improve the interest rate, there by making the loan approval much easier to obtain. The buyers were advised to wait until the credit was updated before they put on offer house, but they found the house of their dreams so they decided not to wait. So the plan was in place and the buyers found a house and got their offer accepted. So far, so good. They paid for their home inspection. No problems there. They paid for the appraisal. No problems there either. This is too easy! Now it's time to update the credit report since they've also paid down that credit card. Wait a minute... the score is lower?!?! Wait a minute... what's this new loan on the credit report?!?! Surprise! There was a brand new $10,000 loan on the credit report. To make matters worse, it was reporting 30 days late for the first payment! Immediately, I called the buyers to ask if they new about this mistake. Surely, they would not have taken a new loan at the same time that they were purchasing their first home. Especially after my usual post-application speech of "Don't take any new debt". The buyer's response was not what I was expecting. It turns out that the buyers purchased a timeshare condo just days before they came to see me for the loan application. My original credit report was pulled before the timeshare showed up. I had no idea they had it. A little stunned, I asked them why they didn't tell me about the timeshare when I took their application. The answer is still my favorites to this day. "You didn't ask me if I bought a timeshare." Good point. I did not ask that. However, I do ask if there is are any other debts that are not on the credit report and starting now, I will always ask if you have just purchased a time share. The Smooth Loan Process Lesson: Always disclose all of your debts. Even the ones that don't show up on the credit report. Harold Perkins, Loan Officer The Mortgage Advantage 480-831-1588 Harold@haroldperkins.com