INSIDER MORTGAGE TIPS: AN INTERVIEW WITH KEN PERLMUTTER OF PERL
Tell us a little bit about your company and its foundation.
I founded Perl Mortgage Inc. in 1994 because I wanted to help provide people access to the American dream of home ownership. We have grown from two people working at my kitchen table to over 200 employees, licensed in 25 states, providing loans to thousands of homeowners every year. We have a customer satisfaction rate of over 97%. We pride ourselves on being large enough to matter but small enough to care.
What are some of the services your company provides?
We are a mortgage banker. We provide both residential and commercial loans. Our residential loans are used by homeowners to purchase or refinance 1-4 family properties. We offer many versions of these loans. When working with a homeowner it is important to determine the product that best meets their needs. Not everyone is a candidate for a traditional 30 year fixed. Some people have more liquidity and want to reduce the total interest outlay and may opt for a 15 year fixed loan and save a tremendous amount of interest. Others may be first time buyers starting their career in a starter home or condo and not need the duration of the 30 year fixed so they may opt for an arm that provides for some significant savings in the early years. This is a very appropriate loan for a homeowner that will not be in a property for long. We offer FHA loans which provide for lower down payments. We offer renovation loans for homeowners to purchase properties that may need some TLC.
How important is it to document my finances?
It has always been important to document one's finances but now more than ever it is critical to be able to provide the proper documentation for a lender to make a decision on a person's credit worthiness. Part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act mandated a lenders ability to demonstrate a borrower's Ability to Repay in order to provide Qualified Mortgages to our consumers. This requires eight underwriting standards that require us to document and analyze all aspects of our client's income and credit. We can only perform this analysis if we are provided complete, accurate documentation. This means looking at all pages of a bank statement, all pages of one's income tax returns, seeing W2's and K1's if a consumer has any interest in a business. It means reviewing complete copies of trust accounts, divorce decrees and sales contracts.
How do I know if it is a good time to refinance? Is it a good time presently?
Determining the right time to refinance is specific to an individual's financial position. An easy assessment for most is to see if there is a monthly savings allowed by taking out a new loan. It is important to realize that there is a cost to this new savings. We can provide a "no cost" loan to a consumer, but this is at the cost of a slightly higher rate than if the consumer paid the closing costs. This rate still may be well below their current rate so it may make sense to do this loan. Others come in to refinance because they need some cash out for investment or other personal reasons. Even when rates are not at historic lows, we still find approximately 20% of the loans we provide are for refinances. This may be because an arm is adjusting, someone is getting divorced and paying off a former spouse, want cash to improve the home or want to shorten the duration of their loan from a 30 year to a 15 year. We pride ourselves on providing expertise to our clients to help them determine the best time and best product to meet their specific needs. That is what makes us mortgage professionals. So although rates may not be at the historic lows, they are still competitive today and provide refinance opportunities for many.
What are some bargaining tips I can use when shopping for mortgage lenders?
It is important to find someone you trust. At times we get called when a consumer applied for a loan with someone else and got to the closing table only to find that the terms did not match what they were promised. The better prepared one is with their paperwork, knowing their income, assets and liabilities when calling a lender allows us to make a thorough determination of qualifications right away to provide an accurate rate and product to meet the consumer's needs.
What are some of my rights as a borrower? How can I use these to my advantage?
The Consumer Finance Protection Board (CFPB), which came out of the financial crisis, continues to enact legislation to protect the consumer. It required a new good faith estimate that is supposed to provide a clearer representation of the costs and terms of the loan. It is designed to match more closely with the closing documents so the consumer can insure that what they get at closing matches what they were promised. The CFPB maintains a complaint site for homeowners to get justice. I would recommend if a consumer feels they are not being treated properly, that they waive that complaint in front of a lender.
Why are many people reconsidering FHA loans? What programs should I consider instead?
Since 2008, when credit tightened, more people turned to FHA because it allowed for lower down payments, lower FICO scores and more liberal underwriting. Agency products that are sold to Fannie and Freddie have more adjustments to the rates based on lower down payments and lower FICO scores which often made the rates on these Agency products more expensive than FHA options.
We saw this transition for a number of years. However, more recently, you are seeing many people come back to Agency loans with MI because HUD has made the UFMIP, (upfront mortgage insurance premium) and the annual mortgage insurance on these loans very expensive to replenish funds in their insurance fund. This has pushed consumers to look at Agency product with traditional MI (mortgage insurance). The traditional MI companies are aligning their guidelines with the agencies and lowering their costs to make them look more attractive for those that have at least 5% to put down.
For those with less than 5% down payment, FHA is still the only option unless one considers rural development, state specific loans or one qualifies for a VA loan.
What are some of my options if I have poor credit?
Credit is an important factor in making a loan decision. If one's credit is poor it may make sense to work with a credit counselor to repair the credit and apply later. In some instances we work with an investment firm that partners with potential homeowners to purchase a home, rents it back to the potential homeowner, and agrees to sell it them at a pre-determined price at a future date when the consumer's credit improves. It is important for potential buyers to be regularly reviewing ones credit to see if there are any mistakes on the report and take care of correcting those issues early so they don't become an issue when it is time to get a loan. Don't assume credit issues will go away over time. Review your credit, fix mistakes, take care of issues and get the best rate when it comes time to purchase a home.
What is the best way for people to get in contact with you?
People can reach me on my toll free line at 888-LOAN-MAN or via email at firstname.lastname@example.org.
You can see the original interview in it's entirety at http://www.illinoishomes.com/articles/insider-mortgage-tips-perl-mortgage