Don’t just shop homes, shop lenders too. Doing so shows you ways to save on your mortgage, and every penny counts. Seize every money-saving opportunity.

To help you save your hard-earned money, consider these tips:

Be a credit expert. Lenders look at your credit score to help assign an interest rate to your mortgage. You’re at a serious disadvantage if you’re one of four people whose credit report is erroneous. Inaccuracies may block you from getting a mortgage, and will make your interest rate soar.
You’re responsible for meticulously picking apart your credit report. If you find mistakes, document them clearly so you can make a case to the credit agency. Do not let inaccuracies ruin your credit score and mortgage terms. Otherwise you will pay for it.

Choose a loan type that suits you. Most conventional mortgages require down payments of up to 20 percent. Paying that 20 percent up front likely means you won’t have to pay private mortgage insurance every month.

However, a few government loans eliminate hefty down payments and PMI. Qualifying veterans and active-duty military members have access to the VA home loan program, which greatly reduces or removes down payments. The Department of Veterans Affairs insures these loans that are loaded with financial benefits. USDA loans serve mostly rural homebuyers, but like VA loans they often feature no money down.

Buyers who saved money for a down payment may be better off going for a conventional mortgage. Nevertheless, there’s no harm in finding out for which government-backed programs you qualify.

Find a favorable loan length. Go for the shortest mortgage life that you can afford. First-time homebuyers spend years paying off the interest before they get a chance to chip away at the principal. You can get 15- or 30-year fixed-rate mortgages, while most adjustable rate mortgages run 5-1 and 7-1.

With interest rate increases imminent fixed-rate mortgages may be best, but it depends on how much money you have now and how much you’ll be making. Regardless, always shoot for the shortest mortgage. It will save you money in the long run. For example, financing $80,000 with 7 percent interest costs $42,000 less with a 20-year mortgage than with a 30-year one.

Pay in advance. Make an effort to put an extra $100 each month toward your monthly payment. No matter what these little extras save thousands in the long run, but might cost you in the short run assuming your mortgage has prepayment penalties.

Making these payments shorten the life of the mortgage and save you money. The savings for a 20-year, $100,000 mortgage with 7 percent interest are considerable. You’d save $20,000 and trim the mortgage by four years. When you send the extra payment, tell the mortgage holder that it goes toward the loan principal.

Befriend your lender. Do not settle for a lender who fails to work with you or doesn’t do everything to save you money. Be suspect of lenders who ignore your questions. It seems like common sense, but some prospective homebuyers get stuck with questionable lenders.

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Christoph works for Sunstreet Mortgage in their new Mesa office and is surely to rise fast t be one of the valley’s most respected loan officers.

Christoph comes from the Real Estate side and having recently made the move to becoming a loan officer, he will be easy for Realtors to work with because he understands what it is like to be on the other side of the fence.

And if you are a buyer, who better to work with that understands the Realtor’s needs regarding your transaction as well as the lending requirements?

Sunstreet Mortgage highlights include:

• Many years of experience by the company management in mortgage banking
• 2 Managers in Tempe: Gary Miljour and Kim Chartier
• Sunstreet Mortgage is based in Tucson with branch offices in Nogales, Arizona and Albuquerque, New Mexico
• Was founded by John E. Capp, Sarah J. Roads and Patrick W. Sniezek

Grand Opening Party

Christoph says that they are planning a grand opening party once they have fully moved into the new space, but if you want to stop in – feel free to stop by anytime.

You can find the Sunstreet Mortgage office in the Stapley Corporate Center , 1910 S Stapley Dr., Suite 202, Mesa, Arizona 85204

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Mike is THE MAN Shailesh and I have gone to for mortgage advice, input, information, help and coaching in the last 4 years. He is amazing. Not only does have a TON of experience and knowledge (over 20 years in the industry), but he is actually a great guy. Someone you’d want to hang out with after work and have a beer with.

So, without further ado… I interviewed my new partner, Mike Moshofsky for this blog to better introduce him to the online community.

Question: What makes you different from other lenders?

Answer: I am different from other lenders because of my knowledge, experience, integrity and work ethic. I personally have over 25 years of mortgage experience and a thorough knowledge of mortgage lending including FHA, VA, USDA Rural housing and conventional financing.  This experience and knowledge helps me identify potential problems early in the process and avoid these problems or solve them so we don’t have last minute surprises.  I believe in sprinting to the finish line and waiting for everyone else. Stress is eliminated when my documents are delivered to title well in advance of the close of escrow.  This makes happy buyers, and brings repeat clients and multiple referrals.

What characterizes you?

Integrity and honesty are my strongest characteristics.  The agents I have worked with for years know  they can count on me every time.  When I say something will happen they can rest assured it will.  My goal is to provide my agents and clients a quick approval that they can count on.  However, I believe a fast “no” is better than a slow “no”.  If a transaction has no chance, everyone would prefer  to know on day one, and not on day 31.

What about your work ethic and loyalty?

I work long hours Monday through Friday and am typically in my office working for my agents and clients from morning till night.  I am not the loan guy that spends all his time getting new agents and clients only to mess up the transaction so they have to go find other referral sources.  I want to take care of the referral sources I have.    That is my idea of a marketing plan.

What are some of your motto’s in this business?

A fast No is better than a slow No.

Under promise and over deliver.

If you think it is expensive to work with a professional, wait until you find the cost of working with someone that is not.

You have to know what you don’t know.  If you are not positive on an answer, get clarification.  Guessing is very expensive.

Never, Never, Never miss a close of escrow.

What advice would you give potential home-buyers and their agents when they are hunting for a mortgage professional?

There are many excellent loan officers out there.  The problem is there are also many unqualified loan officers and it is often hard to tell the difference.  Many sound great, but do not deliver.  My advice is to ask your Realtor for a referral of someone they have had positive results from in the past.  The Real Estate Agent wants you to work with a professional that consistently delivers quality service at a competitive price.

What do you love about this business?

I love figuring out ways to close mortgages that other said were impossible.  I love dealing with first time homebuyers and their energy and excitement when they get the keys to their first home.

What do you hate about this business?

I hate the fact that there are so many non-professionals in the industry.  I believe we need to have licensing, required training and be held to a higher standard.

—

I look forward to working with Mike during this time of change for me and my family. I plan on working until the day I give birth and then afterward will take some time off. I will be accessible through eMail a few weeks following the birth, but will not be back in full time action until 2 months. I really appreciate Mike stepping in and helping out during this time.

To contact Mike, please use the following methods!

E-mail: mmoshofsky@primelending.com

Direct: 480-346-8383

Cell: 480-332-8545

Fax: 866-908-6596

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The problem is the average consumer is not tremendously financially savvy. And therein lies the problem. When option arms were marketed to the average Joe as a financial vehicle, loan originators who themselves are not tremendously financially savvy saw an opportunity to sell more house for lower monthly payment. I’m not trying to put the onus solely on the originator here either. I am of the opinion that the head of every bank in the United States fully knew what they were selling to the average borrower.

I remember a borrower a few years ago who insisted beyond any reasonable persuasion that he wanted to be in such a loan. He said that the payment on the 5/1 ARM I was proposing was to high and he wouldn’t’ be able to afford the house after a few years. However, with the option ARM a different lender had proposed he would be “comfortable”, so if I didn’t give him a similar option he was going to go with the other lender.

This borrower had no business being in an option ARM. Not only was he relatively financially unstable, he was trying to live way beyond his means, counting on future income and future equity to compensate for the short term loss. This was never the market for the option ARM and these types of borrower had no business being in this type of loan. In fact I wrote a post back in 2005 warning borrowers about the dangers of the option ARM. I wanted to remind folks that despite how things were being advertised as a borrower you are still obligated to pay back the full loan amount with any accumulated interest.

And it is because of stories of such borrowers over the past few years that today we sit where we are. Today, Wachovia, one of the largest underwriters of option ARM’s pulled the plug on these negative amortization loans. Here is the news clip from Fortune magazine:

Wachovia (nyse: WB – news – people ) announced Monday that it is pulling the plug on it’s Pick-a-Pay program. The pay-what-you-will exotic loan offerings weren’t exactly subprime –the borrowers were a bit better-heeled Alt-A types– but the default rates on the loans have been much higher than expected and have been driving the lender’s losses.

The loans gave borrowers the option of paying several amounts each month, including low payments that led to an increase in the principal amount of the loans.

Not only did they stop the program they also have said they’ll waive the prepayment penalties on these loans as well. Most option ARM included three year hard pre-payment penalties. So whether you sold or refinanced the loan within the first three years you had to pay a prepayment penalty. With the fall in home prices adding to negative amortization more than they had figured things are not looking good that the banks can make money on these. So, Wachovoia took a long hard look and decided to cut their losses. According to Housing Wire:

Wachovia also said it will waive all prepayment fees for borrowers looking to refinance out of an option ARM, a clear indication of the stress borrowers in such loans are now facing; the bank recently hired Goldman Sachs Group Inc. (GS: 174.90, +0.19%) in an effort to help it figure out what it should do with the Option ARM loans on its books.

As you can tell it’s not just the consumer who is in pain here, Wachovia is hurting too.

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Polls and People

A recent poll by Rasmussen finds that 53% of Americans are opposed to a Federal bailout for homeowners. Last December Rasmussen had found that 54% of Americans blamed the individual borrowers for the mortgage crisis.

With those numbers on my mind I found it hard to watch a video on Mortgage Ciceron’s blog of a woman who lost her home because she was talked into one of those exploding ARM’s. Truly a sad sad story and a very heart wrenching vlog.

Back to the Future… Lisa Simpson’s Nightmare

Remember the Enron story and how Arther Anderson disappeared because of it? Well in an eerily similar story we have an investigator accusing KPMG of allowing, New Century Financial (subprime darling until 2006), to report a profit, rather than a loss. Will they never learn? Reminds me of Lisa Simpson’s confusion when Homer became a Springfield police officer “… if you’re the police, who’s going to police the police?” (Homer the Vigilante)

Down But Not Out

Of course the big news maker this week was the home price index showing record declines, Alex Stenback argues there is no such thing as a national real estate market. He breaks down the media headlines with great clarity. In the mean time, CNN Money has a great article on why now could be the best time to buy reale state.

Campaign 2008 Watch: Who wants to fix what, and how!

All three Presidential candidates had something to say this week about the mortgage industry and financial markets. McCain seeks common sense solutions with minimal politics and government involvement. Obama wants tighter regulation and blamed Bill Clinton among others for the mess we’re in. Hillary wants direct federal intervention.

I’d hate to close this post with a Hillary piece so let me tell you an engineer joke. To the optimist, the glass is half full. To the pessimist, the glass is half empty. To the engineer, the glass is twice as big as it needs to be.

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