Time to Refi? The 5 Most Important Questions to Answer


A home mortgage refinance may sound like a good idea in theory, but it’s not always possible or desirable.

For starters, lenders have tightened up the approval process, making it more difficult to get a loan.

“Homeowners today need to be triathletes to qualify for a loan, with great income, great credit and great value in their home,” says Anthony Hsieh, founder and CEO of, headquartered in Irvine, Calif.

In addition, a refinance may not make sense financially, particularly for borrowers who plan to sell their homes in the next few years.

Before taking the leap and opting to refinance, homeowners should ask themselves the following six questions.

Do I have equity in my home?

Homeowners need to have at least 20 percent equity in their home to qualify for a new loan without paying private mortgage insurance. Adding PMI to the cost of a new loan could negate the benefit of a refinance.

Today, many homeowners are underwater — meaning they owe more on their mortgages than the house is worth. However, being underwater or having little equity does not necessarily rule out a refi.

“Homeowners should still apply for a refinance even if they have low equity, because there are some Fannie Mae and Freddie Mac programs and FHA loans that may accept them,” Hsieh says. “The best way to find out if you fit into a program is to go to a lender.”

Roy Meshel, district vice president for W.J. Bradley Mortgage in Phoenix, recommends homeowners refinance quickly in case the housing slump deepens, causing values to depreciate even more.

Patrick Cunningham, vice president of Home Savings & Trust Mortgage based in Fairfax, Va., recommends an increasingly popular approach — the so-called “cash-in” refinance.

“Some people are opting to bring cash to the settlement in order to pay down their loan balance to qualify for a refinance,” he says.

Do I have good enough credit?

Borrower credit scores play a big role in securing a good mortgage rate. In fact, you’ll need a good credit score to qualify for any type of mortgage at all.

Mortgage rates operate on a sliding scale, with the lowest rates going to applicants with the highest credit scores of 720 or higher.

Borrowers with scores below 620 will have trouble qualifying for a mortgage at any rate.

What are my financial goals?

Many homeowners refinance to lower their monthly payments. A mortgage calculator can give borrowers a sense of what their new payment would be after a refi.

Others choose a shorter-term loan with higher monthly payments so they can reduce overall interest payments and own their homes faster.

“Some people are restructuring their loans to a 20-, 15- or 10-year mortgage, which works well for people with plenty of disposable income,” Cunningham says. “But I worry that people are too focused on paying off their mortgage and not integrating this decision with their overall financial plan.”

Cunningham urges borrowers to make sure they contribute to retirement savings and college savings, pay off high-interest debt, and save six to 12 months’ of expenses “before opting for a shorter, more expensive mortgage.”

Meshel says people should consider whether they want to retire without a mortgage before opting for a new 30-year loan. Those who have employment concerns may want to refinance into the lowest possible payment in case they experience a job loss.

How long do I plan to stay in this home?

Mortgage professionals generally tell borrowers to expect a home refinance to cost 3 percent to 6 percent of the loan amount. A simple calculation shows how long it will take to reach the break-even point when the savings outweigh the costs.

“If the break-even is at 15 months and you plan to stay in the home for five years or longer, it is probably worth it to refinance,” Cunningham says. “But if you plan to move in two years, it may not make sense.”

Meshel says long-term homeowners who are close to paying off their mortgages might not want to refinance because of the costs incurred.

What are the terms of my current loan?

Borrowers with adjustable-rate mortgages or interest-only loans should consider the potential benefit of switching to a fixed-rate loan. Hsieh says all borrowers with ARMs should switch to a fixed-rate loan unless they intend to move within one year.

However, Cunningham says some borrowers can benefit by sticking with their current ARM.

“Consumers with a subprime ARM should definitely switch to a new loan,” Cunningham says. “But some with conventional ARMs may find that they are in a good loan and that their rates are actually dropping.”

While new loans today rarely have a prepayment penalty, many homeowners still have loans with that restriction, which could reduce the financial gain of a refinance, Meshel says.

Do I have a second mortgage or line of credit?

Cunningham says borrowers with a second mortgage will face additional complexity when refinancing.

“Borrowers can either pay off the second loan or combine the two loans into a larger first mortgage,” Cunningham says. “Otherwise, the lender holding that second loan must agree to stay in second position behind the lender of the first mortgage, which the lender may or may not be willing to do.”

Why is the Lending Process so Difficult?

If I had a dime for every time I am asked this question, I probably wouldn’t be writing this article. I would most likely be on a beach somewhere. This is a tricky question to answer as there are several issues that contribute to the complexity of the lending process, but essentially it comes down to three primary areas: risk, regulation and salability.

What is the risk? Well there are several layers of the risk but ultimately when dealing with a potential borrower, I always ask people the same question. If you had the means, would you lend this person your money? If the answer is yes, great. If it is no then my question becomes, “Why should I as a lender?” Believe it or not, if a borrower goes into default there is a potential that a lender would have to buy that loan back and having a bad asset does not help anyone.

The second is regulation. Most people think the worst thing that can happen is a hand slap of a fine from a regulator. This is true; however, there is a lot more damage done. There is reputational risk, financial risk and obviously getting in trouble with a regulator could affect your ability to do business in the future. There are also the little know pitfalls. For example, fines are not just sought out from lenders. Individual loan officers, title agents, and realtors have been involved in personal fines. There is also the fact that most of the lending laws can influence the foreclosure of a property. If a lender fails to check a box or present a borrower with a single piece of paper, it can wind up being a defense against foreclosure or entitle a borrower to a refund of all interest paid over a certain period.

The last item is salability. What does this mean? Simply put, can we sell this loan into the secondary market? Why is this important? Most lenders and even banks do not have enough assets to fund all the loans they make in any given year. After several stops along the way, they are sold into the secondary market as a Mortgage Backed Security (MBS). These MBS are a popular investment for not only mutual fund holders, but 401K and other investors as well. I would be willing to bet that if you looked at your portfolio or your retirement plan you probably own some. Which brings me back to my initial question about would you lend your money, because ultimately, it may be your money. Along with the impact to investments, it frees up capital for us to lend to more customers, which helps us all.

As you can see, these major areas of risk, regulation and salability are very important to the day to day operations of a lending institution, but as an agent, you need to be aware of these as well. Why? It ultimately affects your clients and your bottom line. That is why choosing a partner that will help you navigate through these issues and give you straight, accurate and timely answers is so important. If you are frustrated with this process and need a hand, don’t hesitate to reach out to one of your United Mortgage representatives and we will be happy to help you out.

By David Pearson | Chief Operating Officer at United Mortgage with over 25 years experience in the Mortgage Industry


6 tips to help credit-challenged clients improve scores 

Angelic behavior for a few months won’t erase past poor decisions

  • To improve credit scores, clients should pay more than the minimum payment, close unneeded accounts, make payments on time and start using cash more.

How many buyers have you met who walk in your door with a rotten credit rating and confidently promise to fix things up before they apply for a mortgage?

That’s never a good sign, even in times like these when first-time buyers can plan on hunting four months or more to find a property they can afford and would buy.

The last-minute credit crushers who believe they can make up for years of neglect and irresponsibility with a few tips from an article headlined “5 sure-fire ways to fix your credit” are in for a rude awakening.

Welcome to the age of trended credit.

Today’s algorithms measure credit over the years, not weeks. Three to six months of angelic behavior doesn’t erase the past.

The average credit procrastinator will have to pay the penalty for past sins. That said, it’s still a good idea to get credit scores up, and it’s an even better idea to keep them there.

Here are six sure-fire tips you can give your next credit-challenged client.


1. Stay below the 30 percent threshold

A little alarm bell goes off in the credit bureaus that keep score on credit behavior when your balance on a single card hits 30 percent of your approved amount.

Many borrowers think that they can fill their cards close to the approved limit and all will be well. Wrong. Your credit score takes a hit the minute you hit that 30 percent mark.

Review your credit cards, and be sure you are below that mark on all of them.


2. Pay more than the minimum

Ain’t revolving credit great? You can buy a suit for $800, but you’ll only get a bill for $50 … a month, that is — for a very long time.

Minimum payments are seductive and nasty because if you just pay the minimum, you aren’t paying off your debt, just the interest on your debt.

The principal will still be there the next month and the month after that.

Over time, you are making your lender rich. Paying the minimum is better than paying late or not paying at all. But it’s like treading water.

On the other hand, if you pay more than the minimum every month, even if you pay just a small amount over the minimum, you are moving in the right direction. They call it trended credit because it’s the trend that counts.


3. Close accounts you don’t need, except for your oldest

There is such a thing as having too much credit, especially if your available credit is out of proportion with your income. Lenders are conservative people, and they don’t like the idea that a borrower might go wacko and use all the plastic in their wallets.

Then they might not be able to pay the mortgage. Close out those dusty cards in the top drawer of your dresser, and don’t apply for new credit until you can afford it.

However, always keep your oldest card and pay it off promptly whenever you use it. Lenders like to see responsible behavior over a long period.


4. Get help to make sure you pay on time

There’s no excuse to miss a payment or make a late payment today.

Sign up to receive a notification from your creditor, your bank or one of the free credit management sites such as Mint, NerdWallet or Credit Karma.

When you are trying to get in shape to buy a home, you simply cannot afford a late payment — ever.


5. Consolidate your killer accounts

So you got six months credit free or cash back for a year when you signed up for some of your cards. Now the grace period is over, and you’re getting socked with an APR that would make a rich man howl.

Find another interest free card, and pay a modest transfer fee. Or take out a low interest personal loan, and pay off your balance. Then close out those toxic accounts.

Sure, you still owe the same amount of total debt, but now you have a fighting chance of paying it down. Which you will, won’t you?


6. Reintroduce yourself to cash

Some financial advisers tell you to hide your plastic in a drawer and live on a cash basis. They are like weight loss gurus who say you must live on kale and wheat germ if you want to lose weight.

It just ain’t gonna happen for young Americans raised in a society where you can buy stuff with a smart phone. So don’t go totally cold turkey.

Withdraw a limited amount of cash each week, and use it to buy the gas, groceries and other daily stuff you used to buy with plastic. Make a game of seeing how far and how long you can stretch your weekly cash.

You’ll find you spend less and add less debt.

A final tip: After you’ve sacrificed for many months to put a shine on your credit score and you’ve saved for a down payment and closing costs, the finish line is in sight.

With a U-Haul and a little help from your friends, you’ve got the move under control. You are handy enough to make your new home feel like it’s yours. Your mortgage is approved and closing day is here.

Don’t even think about breaking out the plastic for a big purchase before everything is signed and closing is complete.

More than one lender has checked a borrower’s credit the night before closing and canceled the loan if new debts pop up or a score plummets suddenly.

By Steve Cook  | Originally published by Inman

United Mortgage makes the Inc. 5000 List!

We are excited to announce that United Mortgage is an honoree on the 2017 Inc. 5000 list of America’s fastest growing private companies!

This is the first time United Mortgage has been included on the Inc. 5000 list. With approximately 6,000,000 private companies in the United States, we are feeling grateful and proud to be included among companies that are the cornerstone of our country’s economy.

Since United Mortgage was founded a decade ago, the company has expanded from a single market to now serving 5 states. We have plans to continue expanding and creating the best possible purchase experience for agents and their clients. The future looks bright, and we hope to be an honoree on this list for years to come!

We understand that this achievement, our growth and continued success have everything to do with our incredible team and all of you who have helped us grow over the past 10 years. To you we give our sincerest gratitude. Thank you.


Meet our Newest Mortgage Banker!

United Mortgage is thrilled to welcome Sheri Schmidt to our team! Sheri is a Mortgage Banker who will be working in the Purchase Division.

Sheri has her Bachelor’s degree from the University of Kansas in Journalism. Her experience includes multiple years selling in the music, home building, kitchen design and insurance arenas.  She chose to pursue a career in the mortgage industry because she enjoys helping people achieve their goal of home ownership. Sheri vividly remembers her very first home purchase experience and how exciting and wonderful that was, and strives to create a positive experience for the people she works with as well.

Away from the office, you can find Sheri doting on her nieces and nephews, friends and family.  She also loves to sing, cook, entertain and travel.

Please join us in welcoming Sheri to United Mortgage!



First-time homebuyers just don’t understand down payments

 Top factors blocking first-time homebuyers

The elusive and seemingly unattainable 20% down payment for a home restricts potential first-time homebuyers from jumping into the market, according to a recent survey of mortgage industry executives.

However, while the fact might not be too surprising, it is interesting to note that even the borrowers who understood a 20% down payment is not mandatory to purchase a home still thought it would be difficult to get into a house with less.

The survey of 150 mortgage professionals was conducted at the 2017 Mortgage Bankers Association Secondary Market Conference recently held in New York City and echoed recent concerns in the market about first-time homebuyer misconceptions.

The survey found that 28% of respondents said consumers still mistakenly believe that a 20% down payment is a requirement for purchasing a home. Then, an additional 41% of industry executives surveyed believed that even among prospective borrowers who understand a 20% down payment is not mandatory to purchase a home believe it would be difficult to get into a house with less.

Beyond misconceptions around the down payment, 39% of mortgage industry professionals believe that consumers’ lack of knowledge about the homebuying process is one of the greatest impediments to first-time homebuyer demand.

Following closely behind was lack of inventory (28%) and excess student debt (27%). Rising interest rates came in at 6%.

“While first-time homebuyers continue to drive the purchase market, we believe many are being kept on the sidelines due to the misconception that a 20% down payment is required to secure a mortgage,” said Rohit Gupta, CEO of Genworth Mortgage Insurance. “There are various low down payment options available today that allow prospective homebuyers to reach their dreams of homeownership sooner. It is crucial that, as an industry, we proactively educate eligible borrowers about solutions that will enable them to buy a home when they’re ready.”

“The more we can work together to educate consumers, the better the opportunity for us to put qualified borrowers into homes and fulfill homeownership aspirations.”


By Brena Swanson | Originally published on HouseingWire 


Now is the Time to Refinance Your Home

As a home owner, market volatility can surprisingly be your best friend. After Britain’s infamous Brexit vote to leave the European Union recently, the housing market was shaken up and mortgage rates plummeted. This means that you, a home owner, are in a prime position to consider your refinancing options. You can finally bring down that interest rate or align your mortgage to your long term financial goals. Now is the time to refinance your home.

Because of the aforementioned events, The New York Times recently reported that several marketplaces have seen over a 130% surge in refinancing applications. It was also reported that mortgage rates are the lowest they’ve been in years with a solid prediction that the rates will stay low for the rest of the year. That, of course, does not mean that you should drag your feet on refinancing. But it does give you time to do thorough market research and get your paperwork ready for the application process. With more applications being submitted nationally, there are also more rejections.

We’ve compiled an easy guide for you to prepare your paperwork for financial success.


Refinancing Goals

The first step in deciding to refinance is to consider your goals.  The most common reasons for a modern refinance are:

1.)     Lower your monthly payment

2.)    Pay off your mortgage faster

3.)    Get cash from your home

4.)    Consolidate your debt

5.)    Earn more from your investment property


If you’re still on the fence about whether this is the right financial path for you, talk to a Home Loan Expert for more information.

What Will I Need to Refinance?

We’ll assume you’ve found a reputable and friendly mortgage company and want to move forward with the refinancing process. Most mortgage lenders will require several documents. We’ve listed them here so you can prepare them in advance to ensure a smooth application process.

  • Proof of Income – Usually pay stubs, last 30 days or longer.
  • Copy of Homeowners Insurance – Most lenders want proof of sufficient coverage.
  • Copies of W-2s
  • Copies of Asset Information – Statements of savings, checking and 401 K accounts, and any investment records for mutual funds or stocks.
  • Copy of Title Insurance – This helps verify things like taxes, titles, and property descriptions.
  • And finally, lenders will want your credit report, so now is the time to make sure it’s in tip top shape (Forbes has a great article on how to improve that 3-digit score here).

Now is the Time to Refinance:  Prepare

So now that you are motivated and ready to move forward with the refinancing process, here’s a Step-by-Step guide so you know what to look for and are armed with information:

1.)    Determine Your Goal – Make sure that your goals align with the list above.

2.)    Learn Your Credit Score – The better your score, the better rates you’ll be offered by mortgage companies.

3.)    Research Your Home’s Current Value – Check online for surrounding neighborhood recent home sales to see where local property values are at.

4.)    Shop for Your Best Mortgage Rate – Always shop around, not just for rates, but for a reputable mortgage company.

5.)    Know Your Fees – Be aware of hidden costs like application fees, appraisal fees, document processing fees, underwriting fees, credit report charges, title research, recording fees, tax transfers and points, the list goes on. Make sure that your mortgage company is upfront about all fees, which ties back into finding a reputable mortgage lender. Do not get suckered into the “no cost” or “low cost” refinance scam, because it means they’re just moving your fees into the actual loan in the form of higher interest rates. Do your research and avoid these scams.

6.)    Get Your Paperwork Ready – As mentioned above, you’ll need to gather your statements, paystubs, and whatever else your lender will require.

7.)    Have Cash on Hand – You’ll most likely need cash at closing to pay property taxes, insurance, closing costs, and any other unplanned expenses, so be sure to have some set aside for this. Luckily, (as stated in our first blog post) you are protected as a modern home buyer and mortgage lenders are required to list all expenses in your loan estimate paperwork.

Follow these steps with a great mortgage company and the refinancing process will set you up for long-term financial success.

The Modern Homebuyer is Now Protected

Buying a home can be an intimidating experience. There are a mountain of numbers and forms to fill out and a lot of blind trust that goes into what realtors, sellers, and mortgage companies are saying. There are many stories of today’s modern homebuyer getting scammed (not from United Mortgage, but from less reputable companies full of false promises and deals that are “too good to be true”) that should put a healthy fear into the buying process as they look into their first home mortgage. But, according to Mortgage News Daily and the National Association of Realtors, thanks to sustained job growth and low mortgage rates, home buying is the highest it’s been in 9 years.

How Does This Affect You, the Modern Homebuyer? 

There are two main ways that this current market trend of high home sales positively affects the modern homebuyer. First, with so many homes being sold, mortgage rates are extremely low compared to what they’ve been over the past decade. Now is a great time to buy or refinance a home.

The second, and maybe most important, is that the mortgage process has been changed to protect the cornerstone of the housing market: you, the buyer.

According to CNN Money, new mortgage disclosure rules went into effect in October in order to reduce the amount of fraud and/or intentional complication of the mortgage process to trick the homebuyer into settling for last-second rate changes

The previous system required four forms to fill out, the new system only requires two.  One of which is required to be sent to you three days after a submitted application, meaning it’s now easier to shop several agencies (and yes, we encourage you to shop, especially because we believe in our company and rates and know you’ll come back when you’re ready to start a great business relationship).  Also, this form breaks down estimated closing costs so you’re not surprised by them at the end of sale.

Modern Homebuyer Form

Preview of the new mortgage form to protect the modern homebuyer


Check out the rest of the form here and see how easy it is to use:

Why Are We Excited?

We’re excited because more and more companies, and the government, are taking an ethical approach to the real estate and banking business, which now protects you, the consumer. And the more that consumers are protected, the more homes will be purchased, and the more the entire housing market will thrive as it’s designed to.

We here at United Mortgage do not trick our customers. We do not sneak in hidden costs at closing. We do not use shady and illegal techniques to get more money out of you. Instead, we value you. We want you to return to us as you buy another home, upgrade, or refinance in the future. We pride ourselves in building lasting relationships and leaving a positive impact on our community. We value our reputation because we believe that a reliable brand that you can trust is the real backbone of modern business. It’s why we want to not just be your mortgage lender, we also want to educate you on current market trends and business practices so that you are empowered.

Buying a home, especially a first home, is a milestone in one’s life. It doesn’t have to be scary. It should be celebrated. And we’d love to do that with you.