Back in the early 2000s, I worked as an Account Executive for a large wholesale mortgage lender based in Los Angeles, California.
This meant I connected mortgage brokers and the borrowers they represented with financing from my company or the correspondents we worked with.
Day in and day out, I discussed loan scenarios, scoured credit reports, reviewed appraisals, compared countless programs, submitted files to underwriting, found workarounds, put out fires, and much more.
During this time, I saw the good times and the very bad. I experienced the boom years and the doom years before deciding to walk away from the gig while other colleagues were being laid off.
Behemoths like Countrywide Financial, IndyMac, and Washington Mutual all disappeared before our very eyes.
It was truly a time like no other in the real estate/mortgage world.
I Created This Site Because I Learned a Lot on the Job
But all was not lost. In fact, after several grueling, monotonous years in the industry, something occurred to me…I knew a lot about mortgages!
Because I had learned so much about the process, I decided to share my knowledge and experience with the public.
That led to the launch of this very blog in 2006. Yes, my site is almost old enough to vote and go to college!
The #1 goal of the The Truth About Mortgage has always been financial literacy. And beyond that, financial empowerment.
Because these subjects are rarely taught in school or elsewhere, we must seek out this information on our own from those who have experienced it first hand.
I’m confident I can provide some valuable mortgage insight(s) you likely won’t hear from other interested parties, namely, banks, lenders, loan officers, mortgage brokers, and real estate agents. You know who you are…
If nothing else, whenever I buy real estate, I’ll have an arsenal of knowledge and helpful information at my fingertips to ensure I snag the best interest rate with the lowest fees.
Or simply choose the right type of home loan for my situation, or get a quick refresher on a complex subject.
And not only for me, but for family and friends too. Of course, none of them actually take the time to visit the website, but you get my point.
An Honest, Inside View of the Mortgage Industry
I strive to provide an honest, inside view of the mortgage industry, while explaining the process of qualifying and obtaining a mortgage in the most straightforward and effective manner possible.
It’s confusing stuff, but that doesn’t mean it can’t be explained rather easily. You can even have some fun along the way! Okay, maybe not that much fun, but stick with me here.
There are so many aspects of the home loan process that consumers simply don’t understand, relatively basic things that can affect your mortgage rate substantially, costing you thousands each year, for decades on end.
Fortunately, these seemingly difficult mortgage questions can be answered just by reading blogs like this and others out there.
So go ahead, browse the site and educate yourself. Because in this industry, knowledge equals savings. Big savings!
If you have any questions, concerns, or comments, please feel free to reach out and I’ll get back to you as soon as humanly possible.
If you have access to breaking mortgage news or simply have a good link you’d like to pass along, please provide the relevant information. Same goes for all you out there with press releases. Send me one and I’ll write about it if it’s interesting or notable.
I’ll also try to answer questions about the mortgage process, though it’s difficult to answer each one based on the volume I receive. Before you send a question, take a look at the mortgage help topics I have already covered, you may find your answer. You can also use the search box to find related questions I’ve already answered.
If you are a member of the media and have questions you need answered for a story, give me a shout. I’d be happy to help so long as you cite me properly in the story you’re working on. I can provide nice blurbs to accompany any article about the housing market or the mortgage industry.
Over the years, I’ve written articles for Zillow, Yahoo Finance, U.S. News & World Report, and contributed to many other top publications.
If you have specific questions about advertising on my site, please don’t hesitate to contact me for additional details.
If you’re interested in partnering up, drop me a line. I’m always interested in being propositioned.
You can contact me by using the email address below or via social media including Facebook, LinkedIn, and Twitter.
Thanks for visiting!
And best of luck on your personal mortgage journey…
I’ve read I’m in the process of procuring a refinance and came upon your website. I have read many of your informative topics. I want to thank you for the effort you have put on developing the website. As a consumer, this is invaluable information to have.
You are welcome Joe! Glad you found the site helpful and appreciate the kind words!
I’m new at this page I found about the truth in mortgage. I quite understand of what your putting out there for the customers that’s looking to buy or refinance. Well I’m trying to refinance, over two and half years now I was approved from the DOJ vs BOA for mortgage mishaps. BOA gave me a modification with a 2% ARM. I want to do a refinance with fix rate so that my mortgage payments stay the same. It’s been changed twice from high to low, but my income is low and I have low score. I really need to get out of this mess, what can I do my son helps me with the bills. He receives SSI and I SSDI.
A 2% ARM doesn’t sound too bad, but if rates rise it could be a problem for you in the future. They probably gave you an ARM because it was cheaper and more “affordable” as a modification. And it might be fixed for the first five years, so check your paperwork. If you want to switch to a fixed loan, you could contact a mortgage broker who can determine what your options are with a wide range of banks based on your limited income and credit score, instead of just going to one bank. In the meantime you should also work on improving your credit score, as that could help with qualifying. Good luck!
Things worked out in our favor and we ended getting approval for the re-finance, as it turned out. In any event the use of the information on your web helped me to be more aware of some of the issues which stood as a challenge. Thanks again,
No problem Joe, glad you got approved!
I am in the process of purchasing a house. I have been told by my lender that I have to have PMI. My loan is for 36k the house was appraised at 52k and I am putting 5% down/1800, I have 17,800 in equity. Why do I need PMI if my loan to value is greater than 20%? I am 19 and I have a good job(55k yr) and my credit score is 775. Is there another reason I would need PMI?
If the purchase price is $36,000, and you’re only putting down $1,800, your loan-to-value (LTV) is 95%, hence the need for PMI. It doesn’t matter if the house appraises for more. Lenders use the lower of the appraised value or the sales price to determine LTV.
Thank you for the clarification.
first of all thank you for this information. do u have any tips for first time home buyer.
You are knowledgable, funny, good looking! Thank you for using your powers for good! So, so very helpful – much appreciated, Mr. Robertson. :-))
Hi Mr. Robertson,
Great website you have here. I am looking for information regarding my 7/1ARM..As I look over my documents, my interest rate is at 3.50% and will not adjust until September 2018..The interest portion of my loan, however, is scheduled to be paid off in 2 months…My question is with the interest paid off, what will happen in September 2018? Or do you know where I could go to find this information out?
Thanks in advance,
Do you mean the loan won’t allow for interest-only payments in two months? I’m confused. Your loan docs should specify what will happen once the loan becomes adjustable, including the margin and associated index to come up with the fully indexed rate come 2018.
I have a question:
I only receive SSA and pension income monthly, so I applied for a refinance with cash out. But I was turned down because of insufficient income. So I tried for an equity home loan, was also turned down because of my credit score of 657. What can I do I need my roof repaired.
You can try shopping around with more lenders/brokers to see if you can qualify. Or potentially reduce the loan amount if you are close to the DTI cutoff, or consider a portfolio lender if you can’t qualify via Fannie/Freddie. Good luck!
Hello Colin I have a ? I am applying for a loan to buy a home directly from my parents the appraiser valued the home higher then when they purchased the home they are selling it to me at the price they got it at.The lender came back saying we needed to raise the sell price to even out the loan and the gift of equity can you explain this please.
They may need to raise the purchase price to get the required down payment necessary to fit guidelines. Ask them for clarification.
Hi Colin: I’m a usually frustrated Realtor (Residential Home Buyer Representative) with Loan/Mortgage Officers.
No matter how much lead-time I give the mortgage officer on a Closing Date; the mortgage officer is late with the final approval and of sending the closing package to the Closing Company.
Can you give me any tips on insuring a reasonable date that they will be done with their part? ….And is there a way to penalize a mortgage company if they are late without a reasonable explanation?
I did not see any help in the upcoming HUD-1 changes.
I think the mortgage industry will always be riddled with problems and missed deadlines. I have no solution for that. Perhaps adjusting expectations is a better approach.
I have a 5/1 30 year mortgage with Chase. At closing in May, I prepaid my interest through June, with the first payment due July 1.
I paid the first payment June 15, as soon as Chase had everything set up in their system and I could see it online.
Since then, I have made several extra principle payments. (My monthly payment is about $890 and I pay about 2k+ a month.)
Chase has not reduced the distribution amounts regarding the interest and the principle, despite the extra “principle only” payments.
Chase is still treating the loan (applying the payments) as though it were a 30 year fixed loan.
Shouldn’t Chase be adjusting the distribution based on the principle balance, once a month? That is what my two previous lenders did. My monthly payment stayed the same, it was just applied differently.
Extra payments go toward the principal balance but the monthly payment stays the same…the loan is just paid off in less time (less than 30 years).
Thank you. I do understand that part.
The amount of interest paid each month should be less (some, not much, but still SOME) if I am making extra principle payments each month, even though the monthly payment stays the same.
Chase is still collecting regular payment and distributing the payment as through it were a 30 year fixed loan. It’s ignoring the fact that I am paying a lot of extra principle each month.
Shouldn’t they be changing the amount of interest each month be less than the 30 year fixed loan because I am paying a lot of extra on the principe each and every month?
More of each payment should be going toward principal each month with a lower outstanding balance. Make sure they are allocating it properly and not just holding it somewhere.
My home has been on the market for 6 months. I have favorable 3.5% mortgage but still owe 80% of value. Can I sell the home on some sort of contract that allows me to carry new owner and continue to make my current mortgage payments? If so, what is market for minimum I should require down and carry interest rate?
We just refinanced for 15 year mortgage but we want to be debt free in 8 years! On our Amortization Schedule, if when I pay the 1st payment and add the principal portion of the last payment(180)…and continue 2nd payment add principal portion of payment 179 and do this every month then the mortgage would be paid off in 7 years and 6 months! Is this correct!
My father passed away a year ago 10/31/2014. The family home was willed to me and my two brothers. The younger brother is obtaining a mortgage to buy out my older brother and I. After numerous delays over the last year, we were supposed to close today on what the attorney said is being considered a refinance mortgage. So we would have to wait three business days for rescission. I do not understand if there is such a law, why there is not a law that allows the interested parties to sign or agree to waive this issue, especially as this is between brothers. Also the attorney is being very arrogant and condescending. Now we get told that the bank failed to email him the package, after my older brother and I signed all of the paper work. Will we have to re-sign or will the younger brother, purchaser of the home be the only one to have to sign and will that further delay the issuance of the funds?
The RoR is a standard clause on refinances; it can be waived with certain extenuating circumstances but it’s very hard to waive and lenders don’t like to waive it because if something happens they can get into trouble. I get that the process can be annoying and bureaucratic but it sounds like you’re almost to the finish line. GL.
To cut the term in half, you could take the 90th payment’s principal amount (find this using an amortization schedule) and add it to each monthly payment.
If the principal on a loan is paid off but not the interest, does the interest amount change or is it fixed and still to be paid at the time the principal is paid?
If your payments are fixed you’d pay the loan off quicker but monthly payments would stay the same until the balance is zero.
We bought a home in April 2005 in Florida, Purchased for 450,000, loan was structured as an 80/15/5 with Company A. 5% I placed down at purchase, the 15% was purchase money as HELOC (known then as a piggyback). 1st mortgage has always stayed the same. In Oct of 2005, we had the HELOC converted to a HELOC with a revolving secured line of credit with a limit of 125,000. This money was dispersed to pay off the HELOC from April (piggyback), and 20K was dispersed into a personal checking account. There were also undisbursed funds. All these monies were paid back over the next 10 years to present.
Fast forward to 2015, loans in good standing, I am Attempting to combine The remaining 1st and HELOC loan into one loan to refinance to a fixed rate with Company B.
Company B wants to increase my locked and fixed new rate because they saw the HELOC from Oct 2005 as a cash out refinance instead. My Old loan papers state that the mortgage was a HELOC with a secured line of credit.
When does a HELOC become a cashout refi? when your paperwork says HELOC. Based on the definitions Ive read on Cash out, my loan structure does not fit with that definition. I have about 20% equity in the home now, which includes some lost equity from the market crash. Can company B call this a cash out situation? Appreciate your feedback.
Generally HELOCs are treated as cash out when refinanced if not originally used to purchase the property.
I love your blog. Wishing you success and longevity with it. I’d like to see some articles and ideas on owning a home and buying another one simultaneously. What are the requirements?
I can see that many people may have to buy another home while they are in their current home because the rentals are increasing in value, moving to another state may require an employment history to qualify for a new mortgage.
Thanks Sandy, I’ll work on that topic and try to get it up soon. Thanks for the suggestion and the kind words, it is greatly appreciated!
Hi Colin! You mention in the section about Alt A loans that many lenders offer low or zero down payments. I am looking for a lender that will do a 5% down payment Alt A loan of around $200-250k. My three scores within the past 3 days were 790/792/803. Any suggestions? Thanks!!
What makes your loan Alt-A? You have excellent credit and 5% down is readily available.
Hello Colin, I am caught in the middle of a complex situation in which I am the victim of both mortgage and bank. My father and I are failing to understand the steps to take after our landlord who owns the house failed to pay a mortgage and now we are being asked to leave. We even had a so called real estate agent come into our house (broke in) and then told us that he’d help us relocate. He even offered us money if we left the house on dates that he had set. I am in urgent need of help, for I am new to this I am only 18 and all this is new to me I am trying my best to help out my dad and make the right decision. Who do we believe? We got a letter in the mail saying the house no longer belonged to our landlord or it had been auctioned. We were also told by our landlord that he still owns the house, and then the “real estate agent” claimed that he doesnt. So we are completely confused and are thinking of following the real estates agents advice on emptying the house and leaving.
Before you make a decision you may want to research tenant rights in your state when your landlord is facing foreclosure. While you’re at it you may want to get evidence that they’ve actually been foreclosed on, when it happened, and what the timeline is for you to take some sort of action. Good luck. Hopefully you’ll learn a lot through this process.
Hi Colin, I’m trying to refinance my home and am confused by the Fannie Mae rules. I researched a lot, read a lot, trying to understand the things that confused me. Your writings are very informative, I haven’t found anyone else explained things so thorough. They answered many of my questions, but I still have one question that haven’t find answer yet. I am a US citizen, a US company’s employee, have W-2 forms. I pay income tax to IRS. My address in 1040 is my US home address, but I qualify for Foreign earned tax deduction and on that form 2555 I have a foreign address. The underwriter said, since I have a foreign address and live there most of the time in a year, therefore my US home is not my primary residence, and they treat second home as investment property because it is a duplex. I have not married, my mother and I live in this duplex as one family for the last 17 years and we always have meals together. I didn’t rent out my home, I have all my belongs here and I live here whenever I come back home. My mother lives here full time. That is my home. I never thought my foreign address can be called “my home”. From IRS point of view, my US home is my primary residence. Is there any chance that I can find an underwriter who shares the same view as IRS? If so, will you be able to recommened one? Is there any absolute answer ? I even called Fannie Mae, but they said they can only answer questions to underwriter if the underwriter would call to ask. They don’t allow to answer consumer directly. Hope you can clear my mind and help me out. I would appreciate very much.
Fannie restricts second homes to one-unit dwellings, otherwise they assume it’s a rental since it’d be weird to own multiple units as a second home that are vacant most of the year. Maybe you could get an exception as owner-occupied since it’s your only home and houses an elderly parent? It might be worthwhile to “ask around” aka use a knowledgeable broker who has access to lots of lenders and can find a home for your refinance. Good luck.
Thank you, Colin! Your answer cleared my mind for what might able be done and not waste time on what can not be done. I’ll try and, yes, wish me luck ;-)
I recently wrote a book on mortgages and I want to send you a copy for your review. Can you shoot me your address and I will drop one in the mail to you.
I’m on a fixed income, and a rental property in Atlanta (a very bad investment) is draining me financially. I can cover the mortgage even when there’s not a tenant, but I’m consistently losing money (ongoing major repairs, multiple burglaries including a recent home invasion, vandalism, non-paying tenants, etc.)
Wells Fargo won’t grant a short sale because of my ability to cover the mortgage. But I need to walk away, and I’m told a deed in lieu of foreclosure will damage my credit less than a foreclosure.
Is it likely WF will grant a deed-in-lieu of foreclosure if they said no to the short sale? Should I hire a foreclosure defense attorney to argue my case? If so, what’s the best way to find a good one?
Thanks in advance!
I purchased my house 19 years ago using an FHA fixed at 4.25%. I received my loan through a mortgage company and at the time they told me it would probably be sold. Which is understandable. I notice on my statement from the new company that my interest rate is 6 1/2%. Can they raise a fixed FHA rate?
If the loan is truly fixed the rate shouldn’t change so you may want to dig into your paperwork and/or make some phone calls to get some clarity.
My husband had a VA loan during his first marriage and now I need to find out the amount that we need to pay back in order to use the VA loan again. Could you give me some ideas of where to look for the answers?
Check out my VA page about using second-tier entitlement.
Colin – If i applied for a HELOC on my current house in order to use those funds to make a downpayment on a new house… is it fine if i apply for a mortgage for the new house before the HELOC on my exisiting home isn’t closed yet?
I would think the common approach is the other way around so the new lender knows where the down payment funds are coming from (and that you actually secured said funds because there’s no absolute guarantee) and factors the HELOC payment into your DTI when applying for the new loan. Also, the new home purchase would likely make the old house an investment property assuming you plan to make it your primary, which could also muddy things.
What are the most important considerations which affect the appraisal of a house aside from comps?
Hard to say…maybe age/condition, square footage, location, view, etc.
Please help! Whatever you can do to assist in helping us is most appreciated. My husband had a previous condo in Miami which we couldnt afford and let go (by let go, we followed the process of foreclosure) and eventually, the homeowner’s association bought it from the bank (Nationstar Mortgage). This happened in 2012. It is now 2016 and it still shows as “late” on my husband’s credit report. They have been reporting late payments up to this date. We reported this to the credit bureaus and also provided them with documentation that the home had been sold and they were issued a check and it now belongs to a new owner (the association) 2 out of the 3 credit reporting agencies have stopped reporting and we still need a letter from Nationstar stating that the loan is not late. They are giving me a hard time. We want to buy a new home and have been approved but the new lender asked us to retrieve a letter from Nationstar and till this day, they havent sent us anything, they said they have a right to report the lates every month. Please help.
Maybe show the remaining credit bureau that the other two bureaus have removed the lates per your documentation to see if that will do it.
If a house is listed as approved for an FHA or USDA loan and shows as such on the MLS, but upon inspection the house found not up to code for either of these loans, who is responsible for the repairs?
I am in PA if that matters.
Is there a way that I can find a list of the nation’s top 10 VA Portfolio/Servicing Residential Mtg. Lenders, besides Freedom Mortgage?
(Ranging several years back, by the way..)
Big Thanks for a timely response, sir.
I’ve seen properties say they are approved for FHA only to find out they aren’t…common real estate agent mistake or oversight. Not sure anyone is responsible. Might be a negotiation with sellers to offer credit to repair to close the deal.
Hi Colin – do you have an e-mail address or other contact information you can share? Had a proposal I wanted to run by you.
Let me know! Thanks
Check out my contact page.
Hi Colin- I couldn’t help but notice veterans asking about 5/1 arm vs fixed rate loans. I recently refinanced with a VA hybrid loan that is only available to vets.
Was curious if you were familiar with it, and would you recommend?
A hybrid ARM can be a good product because the rate is lower than the 30-year, especially if someone isn’t planning to keep their home/loan for much more than five years. But you can get into trouble if rates rise substantially and you’re unable to refi/sell.
first I want to thank you for all the information you posted. I learned a lot by reading it.
my question is: is there any difference in the total cost of a loan if you take a 15-year fix or 30-year fix and make the extra payment?
the one point I see is on a 30-year fix with a lower payment, if you can’t make the extra payment you can skip it while you “can’t” skip the monthly payment on the 15-year fix.
will like to hear your opinion.
Basically the difference is the interest rate is lower on the 15-year, so to truly equal the 15-year with a 30-year, you’d have to make even larger payments to pay the same amount of interest over the term. But as you said, the 30-year gives you flexibility. Of course, some people think that flexibility will be abused and you won’t stick to the plan…
I have a situation where the house has been re-financed with the credit union bank in 2010. Since the house market value went up, we have paid for another appraisal in 2015 with the same bank. No structural changes took place; however, the 2015 appraisal came up with “illegal” in-law apartment. The 2010 appraisal has it as a walk -in basement. It is a basement.
Based on the “illegal” structure , the appraiser reduce the property value for a potential demolishing of the in-law apartment (15K ) and we didn’t meet the 20% equity for the PMI cancellation.
1. Was it a violation by the bank to flip the same house (2010 vs 2015) not to cancel the PMI?
2. Was the appraiser allowed to use the “illegal” terminology? He is not a contractor.
We have a permit for the house addition. The walk-in basement (in-law) is a part of it.
What to do now? Do I have a case to file a complaint against the bank unethical practices and the appraiser ?
We have purchased the house in 2003 (1st appraisal). It was nothing said about the illegal in-law apartment.
Thank you in advance
Unfortunately, that’s not something I’m familiar with, so I can’t be of any help. But I hope you’re able to resolve it.
I am looking for monthly 30 year mortgage rates from 1950 through the present. Do you know where I could get this data?
I wrote about them once, search my site for historical rates.
You are an excellent writer, and I do not say that lightly. I write for a living and I need to help my readers enjoy complex stuff. You do it and you do it well.
I am a new loan officer and learned so much secret info(my broker would never tell me) from your website too, lol