Archive for April, 2011

YAY! Lender LOWERS FHA credit score requirement to 580!

I ask you… IF you can get a mortgage with:

1. A 580 credit score

2. Your grandmother can gift you the 3.5% down payment

3. The seller can pay ALL your closing costs

4. (You can have ZERO contribution of your own money)

5. You do not need reserves to qualify.

6. You can get an interest rate below 5%

7. You have more inventory to choose from than eggs at an easter egg hunt.

8. You can have a new mortgage payment less than you are paying in rent.

9. You LOVE your realtor.

10. You LOVE your loan officer.

11. You HATE your roommate.

What is everyone waiting for?

Spread the word. Life is good. We need to take advantage of it!

Having a dream is good, owning one is better!

Leslie Pelletiere, Owner/Broker

First Class Financial Services, proudly mortgage lending since 1999.


MB#0902810/ NMLS#162494


How does the new Loan Officer Compensation affect your buyer/seller?

First, did you know there WAS new loan officer compensation?

There is.  Basically (although unbelievably convulated and confusing) the new legislation says that borrowers have 2 options.  EITHER to pay their loan origination fee OR to accept a higher interest rate and have the lender paid the loan origination fee.  Seems simple, right?

Here’s where YOU, as their realtor, come in.  Does the loan officer that your buyer is obtaining their loan from, even have TWO options? Many lenders are adopting ONLY the lender compensation and ONLY offering the higher rate option to your client.  IF you buyer is unaware that their are two options available to them, they may not know to ask or search for another loan officer (me). 

Keep in mind, many times a lender paid, higher rate option works best.  My job is to ensure that BOTH are presented to the borrower so, through analysis, we can determine which is best. 

Also, on the lender paid option, most lenders have adopted a MINIMUM amount in order to ensure the loan officer receives adequate compensation regardless of the loan amount.  HOWEVER, the lender may have to increase the interest rate, considerably, in order to pay the minimum compensation to the loan officer, again dramatically impacting the quality of the loan for the borrower.

On another note, the new Loan Officer Compensation does NOT allow for ANYONE to pay for ANY additional costs associated with the loan OTHER than the borrower.   This typically comes up under lock extensions.  IF a loan needs to be extended at a cost, the buyer is the ONLY one that can pay that expense.  NOT the loan officer.  NOT the realtor. Regardless of WHY the lock needs to be extended AND given that this is a new expense, the buyer will need to re-disclosed this expense (with mandatory disclosure times) which could affect your close of escrow date.

Just be aware. Ask questions. If your business is referral based as mine is, it is critical we are advisors for our clients not just transactional.

Having a dream is good, owning one is better!

Leslie Pelletiere, Owner

First Class Financial Services, proudly mortgage lending since 1999!




NMLS #162494

AZDFI Loan Officer # LO-0911453


Kids and Money… The 3 C’s

Critical. Control. Credit.  Critical is #1. Control is 1.1. Credit is #1.2.  (All close in line is what I am trying to say)  

I have talked to my son about all of these since he was a toddler.  Little did he know when we were talking about how inappropriate it was for him to be throwing a fit while begging for candy at the grocery store, that we were really talking about his credit report.   “You cannot get future great stuff without doing the right thing right now” 

Critically think first, practice some control and know that credit is like breathing.   Re-read that last sentence.  If we all jumped out of bed, said “Goodmorning Day” and adopted that as our new mantra… where would we be? 

So many clients come to me with the dream of home ownership only for me to tell them that their credit score it too low to qualify.  They have worked their butts off, they have spent years saving the down payment money, they have changed their lifestyle to handle the new dream mortgage payment but skid…… no dream home for you.  Their credit score is too low because last December, when they bought a new big screen TV instead of making the credit card payment,  they forgot… “You cannot get future great stuff without doing the right thing right now”  I have to also remind them that their credit score plummets and is like climbing Mount Everest to get the score back up again.   THAT conversation is why I write this blog.  Although titled “Kids and Money”, sometimes my 44 year old clients need to be reminded of the lessons they should have learned with they were 4.

Critical. Control. Credit.  Start with YOUR kids when they are 4. 

Having a dream is good, owning one is better!

Leslie Pelletiere, Owner

First Class Financial Services
602.294.9288 (p)

MB#0902810 / NMLS#162476

Kids and Money…It doesn’t grow on trees!

The money may not grow on trees but it does come from gifts! I encourage my son’s family members to gift in the form of CASH.  I know. I know. Most gift givers do not want to give cash but it feeds to the rest of my story.  #1 He loves the cash.  Most family members now give him the gift in the form of individual dollar bills.   Admit it, it just seems  like more.  #2 We practice control.  How much to keep? How much to deposit?  #3 We make another trip in the “dream car” to the bank.  With “whats my balance?” being the next thing out of his mouth.  Music to my ears! #4 Once the whole journey is over, he is reminded just how important it is to think first, deposit second, spend third.

My parents have also started contributing directly into his 529 college fund.  They will send him something small and a note that they have contributed towards his college.

This morning we had the “How can I make more money?” conversation.  He is seeing his goal looming on the horizon.  He turns 16 in 310 days, 8 hours and 23 minutes.  Not that either of us are counting.

Having a dream is good, owning one is better!

Leslie Pelletiere, Owner

First Class Financial Services     602.294.9288 (p)

MB#0902810/ NMLS# 162476

Kids and Money… Goals. New Account. Compounding Interest!

What is more exciting to talk to your kids about than the magic of Compounding Interest? Ok so maybe thats just me! 

My son and I started by talking about what he wanted to spend his money on.  Initially it was small things he could buy immediately.  The more we talked about it, the bigger his “dreams” got.  He ultimately decided he wanted to save for his first car.  On that note, we drove his “new dream car” to the bank and opened an account.  Ask your local bank about accounts specfically designed for kids.  

Over icecream, to celebrate, we talked about compounding interest.  The conversation is radically different over ice cream and with his own money.  Once he figured out that the bank would GIVE him money, his sense of urgency to get money into the account compounded as well. 

Now every time he makes or is gifted money, he holds out a portion for himself and the remainder is deposited into his account.  He has a picture of his Jeep posted above his desk, right next to his bank statements. 

Might be a good time to think about your own goals (home ownership or upgrading, of course),  open an account and master the power of compounding interest!  You can thank me later!

Over a glass of wine tonight, I’ll decide my new goal for all the money I saved not having to buy my kids first car!

Having a dream is good, owning one is better!

Leslie Pelletiere, Owner

First Class Financial Services

602.294.9288 (p)

MB#0902810 / NMLS# 162494

Kids and Money! Start early…

My guy is the most amazing 15 year old on the planet and his first word was “mortgage” so to say I know something about kids and money, is an understatement.  I used to teach a Finance class to 8th graders and it was disturbing their view on money, it’s source and it’s longevity.   So here begins my blog on kids and money!

My first suggestion is an easy one: Start early! As early as your children learn the value of a hot stove they should learn the value of money.   The value of saving it and the value in spending it (spending it specifically on real estate 🙂

How hard we have to work to acquire it and how quickly it is spent.

What a credit card is and that they are more than just a plastic card that comes with wallet. (3 years of teaching and many 8th graders could not explain HOW a credit card was re-paid)

The value of your credit report and identity.

The tremendous benefit of a monthly budget.

I used simple times to explain complex ideas even to my toddler.  Don’t under estimate your ability to make an impact on an incredibly important topic at an early age.    The survey the 8th graders took at the end of the year many wrote “…very thankful I took this class!  I had no idea!” 

I’m sure it goes without saying but practice what you preach, start early and you might learn something about your own finances along the way!

Having a dream is good, owning one is better!

Leslie Pelletiere Owner

First Class Financial Services

602.294.9288 (p)

MB#0902810 / NMLS#162476

Last Mortgage Mistake to Avoid: NOT reading your loan documents.

Ok so some things just should be a given.  Read what you sign before you sign it!  Mark it down. Add it to your list. It’s an always not a sometimes. 

I am not making this up:  99% of my mortgage closings are done at the escrow office however I have probably signed oh, say, 100 mortgage transactions in my career.  I would say what, I don’t know, 100 of them the client said, “Where do I sign?” before even THINKING about reading the document. What? Ok, call me crazy but I read the fine print on my cereal box.  Although important, that is not my 30 year mortgage document!

It is the borrower’s responsibility to read, understand and agree to their mortgage terms.  It is almost impossible to turn back the clock if you decide what you signed was not what you thought it was.  Yes, it’s a pain. Reading through, what is now 50+ pages of mortgage loan documents but it is worth it to confirm what you thought, ask questions about what you don’t understand and make corrections if you see errors BEFORE you sign. 

Don’t be afraid to ask your loan officer or realtor to attend your signing with you too.  It is the last step in your happy new house experience and our last step in future referrals.  We are happy to do it!

Having a dream is good, owning one is better!

Leslie Pelletiere, Owner

First Class Financial Services

602.294.9288 (p)

MB#0902810 / NMLS #162476

Mortgage Mistakes to Avoid: Forgetting to LOCK your rate!

Many clients ask, “When should I lock?” I always answer, “IF you are happy with your rate, lock now!” The benefit/risk scale is tipping heavy on the risk side here.  The markets move all day everyday and we cannot control the movement in interest rates.  IF you are a gambler you can float however you need to be prepared for swings in the market.   I watch the market all day so I can see trends that may lead to a change in rates  however I’m Speedy Leslie not Speedy Gonzalez so many times, regardless of how quick I move, I cannot get into the lock desk before rates change.

Many people then ask “What if I lock and the rates move?” MOST of the time, when your loan is locked,  it’s locked.  Good, bad or otherwise.  The rate will not change.   SOME lenders do have a float down option that if you lock and rates get better, and you meet a miriad of requirments, you may be eligible to drop the rate.  Typically those lenders are priced higher out of the gate so really you are better off just settling into your locked rate and relish in the comfort of it’s security.

Remember, we are globally exposed with our markets these days.  Something crazy can happen in Egypt and our markets move.   Given the millons of things that can impact the market, if you are happy with your rate, just lock it.  You can thank me later.

Never assume your loan is rate locked until you get confirmation in writing from your loan officer.

One last thing, when you are loan shopping:  All the rates you are quoted are only quotes.  That quote is not secure until you lock the loan and with rates moving sometimes several times in one day, you really need to know WHO you are dealing with.   Are you being quoted some fantastic rate just to reel you in? Then when it comes to lock time, the story changes? Hopefully not but this is when a referred loan officer makes all the difference. 

Having a dream is good, owning one is better!

Leslie Pelletiere, Owner

First Class Financial Services

602.294.9288 (p)

MB#0902810 / NMLS#162494