Blog Category: Refinance

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2021 Mortgage Loan Limits

Every year, the Federal Housing Finance Agency (FHFA) sets a dollar cap on conventional mortgages that Freddie Mac or Fannie Mae are allowed to back, commonly referred to as a conforming loan limit. In 2020, the conforming loan limit for a single-family home was $510,400. This year, the conforming loan limit for a single-family home increased to $548,250, nearly 7.6% higher! Read More

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6 Tips on Choosing a Mortgage Lender or Broker

Is choosing a mortgage lender important? People spend a lot of time looking for the perfect home. There are the countless hours spent poring over real estate listings, the weekend trips to open houses, and the days of driving with your realtor from showing to showing. However, choosing a mortgage lender or broker is often treated as an afterthought. Many buyers simply go with their own bank or a broker/lender recommended by their realtor. They do so without researching competitive rates and looking for lenders who will also educate them.

This is a critical mistake. Read More

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Accountants Don’t Live In The Real World

OK, it is time to fight. I am sure this will cause some anger. And possibly a heated exchange or two. But yes, I do think some accountants don’t live in the real world. They live in a fantasy tax world where taxes and tax decisions are the sole determining factor in all of the life decisions they encounter. I can see it now when told by clients who were expecting a child, an accountant having a stern response around the costs and tax implications of said child. Want to get married? Better consider the tax ramifications first!

Read More

interest rates

Bond Market Report – April 2019

 

The 10 Year Treasury Bond is at 2.56% as of last Friday. This is about the same as the last time I posted 10 Year Treasury Bond data in early January.

On 01-03-2019 the 10 Year Treasury Bond was 2.55%.

The 10 Year Treasury Bond is not a direct correlation to mortgage rates. It is simply a good to know historical information on treasury bond rates.

Below are some interesting historical numbers*:

In 2018 the average yield of the 10 Year Treasury Bond was 2.91%.

In 2017 the average yield of the 10 Year Treasury Bond was 2.33%.

In 2007 the average yield of the 10 Year Treasury Bond was 4.63%.

In 1997 the average yield of the 10 Year Treasury Bond was 6.35%.

In 1987 the average yield of the 10 Year Treasury Bond was 7.18%.

In 1977 the average yield of the 10 Year Treasury Bond was 7.42%.

Where is the 10 Year Treasury Bond headed next?

*The source for these numbers comes from: https://www.macrotrends.net/2016/10-year-treasury-bond-rate-yield-chart

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Can I Refinance To A 15-Year Loan From A 30-Year Loan and Keep My Payment The Same?

 

In a word, no. This is not possible. I wrote a blog back in 2011 in another feverish refinance market. It showed the numbers on how you can’t shorten the term of your loan from 30 to 15 years without increasing your monthly mortgage payment. Those numbers bear repeating in the current interest rate climate and are below. Check out this hypothetical example: Read More

Cash Out Refi Restrictions Lifted

I have had some clients pay cash for a home for various reasons to expedite the purchase or to make the most competitive offer. They then plan to get a mortgage soon after the purchase to recoup a portion of their cash. And it used to be that if owned a property free and clear that you had to wait a least a half a year to be able to get cash back out of the home. But now there is an exception to that rule. Read More

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Cash Out Refinance

Cash out refinancing, where you borrow above what you owe on your existing mortgage, is many times a better way to go than getting an equity line. Equity lines are usually adjustable rate mortgages based on Prime Rate, which is currently very low. But: Read More

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Cold Callers And Marketers Are People Too…

I had a potential client approach me about a possible refinance. They said they had been getting fliers and phone calls saying they were eligible for low, low rates for a refinancing. Hmmmm, low, low rates? She said she thought she was unable to refinance. I asked two questions and knew she was unable to refinance. She had no equity in order to refinance, and a crazy story! Read More

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Did The Coronavirus Make Mortgage Rates Go Down? Did the Federal Reserve Just Cut Mortgage Rates To 0%?

Mortgage rates did indeed go down after the Coronavirus spread and financial markets started to panic. But the Coronavirus and mortgage rates aren’t directly connected.

People considering a refinance continue to contact me for low rates, but now that rates have spiked it may no longer makes sense.

The recent mortgage rate reductions we saw may be gone for a period of time, but the rate changes are not as drastic as the media made it sound. Read More

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Don’t Cash Out, Cash In!

Don’t Cash Out, Cash In! Some people call me about taking some equity out of their home, this is called a “cash out” refinance. Lately, people have been calling me about putting “cash in” to their refinance to pay the loan down. With property values having fallen in some markets, instead of giving up on refinancing some people should consider paying the loan down by paying some of the principal down at settlement.

It seems these days putting cash into your house may get you a better return than stocks! Freddie Mac says 33% of all homeowners who refinanced a mortgage in the 3rd quarter of this year paid down at least a portion of the original loan. This figure was up from 23% in the second quarter. Freddie Mac began keeping track of these stats in 1985, and they show the “cash-in” share of refinancing activity was the highest since they started tracking these numbers 25 years ago.

Not only is paying down your loan a sign of a real estate market that has gone down in many areas, it is likely a sign of the fiscal times. People seem to feel they have taken on a lot of debt, and its time to pay it down. So paying down your loan may be a wise economic move, or it may just make you feel better to owe less money. Either way, talk through the savings, closing costs and the potential returns on paying down principal with an experienced mortgage professional. It may make sense for you!

To contact me to discuss your mortgage, mortgage rates, or other mortgage questions, click here to schedule a call or you can email me directly.

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Get A 15 Year Mortgage Instead Of A 30 Year?

Many people ask about 15 year mortgages. Some people ask about a 15 year mortgage in relation to refinancing. They figure with lower rates maybe they can afford a 15 year loan instead of a 30 year loan. And some people inquire about a 15 year loan when buying a home, because they want to pay off debt faster. But the monthly payments are quite a bit higher on a 15 year loan. Although you can save a lot of money over the long haul, you really have to decide what you can afford, and if cash flow is more important than building equity.

Read More

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Government Refinance Help?

This blog post will definitely be educational, and does have a specific topic. However, it will end up sounding like more of a rant than anything! The topic for today’s blog post is a loan program called the “Refinance Plus.”

The Refinance Plus allows people to refinance who have less equity than when they bought the home. There are numerous guidelines that I will not bore you with, as I want to focus my rant/blog on one specific area of this loan program. Read More

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High Returns In Paying Down Mortgage Debt

Should you be paying down mortgage debt when you refinance? Many people measure things as a return on investment, or a percentage return. If someone said they had an investment to tell you about that would provide you a .5% return you would not even listen. If someone said they had an investment to tell you about that would provide you a 4% return risk free, you would stop and hear them. A 4% return is an 8 fold return over a .5% return! And we all know that it seems hard to even impossible to get a decent return these days without taking on what many of us think is high risk. Investing in stocks these days still feels like a high risk proposition. We all get miserable returns from banks for CD’s and savings accounts. Read More

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Important Things To Remember When Refinancing

What do you do in order to remind yourself of things? Tie a string around your finger? Use a paper day planner? Do you use a software or online calendar? How about just using my blog instead!? I hear of many people getting sold a refinance instead of making sure they are doing it for the right reasons. Below are some good notes to remember when thinking of refinancing.

Important Things To Remember When Refinancing Read More

interest rates

Interest Rates Are Still Low. Or Did They Go Up? Are They Down?

Interest rates rose after the presidential election. The news from the bond market according to MBS Online was “Trump has advocated for greater spending on defense and infrastructure. And at the same time he proposes to cut taxes. These policies raise the prospects for increased deficits and inflation. Neither of which are good for mortgage rates.”1 Read More

Rocket Mortgage

Is Quicken Loans “Rocket Mortgage” Going To Explode In Mid Air?

There was an article recently on TechCrunch.com that was titled “This Could Be The Mortgage Industry’s iPhone Moment”. It proclaimed “Quicken Loans sees Rocket Mortgage as the turning point in home financing”. And, “It’s home financing’s iPhone” and “The process takes less than 10 minutes.” Hmmm, we’ll see about that. Read More

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It’s Hard To Fit In There!

Sometimes people just can’t squeeze it all in. Right now, it is hard for banks to fit all the business they have through their systems. Now, I am the first one to pile on the banks for their bureaucracy and inefficiencies. However, in the case of any business, when you suddenly get an onslaught of 10 times the business that you normally get (that is a 1000% increase folks!) no one will be able to handle that efficiently.

Have patience when people are busy

So anyone that wants a mortgage right now will need to be patient. Banks will prioritize purchase loans over refinance loans, since the purchase loans have contractual deadlines.

And for all of the people getting a refinance right now who want to complain about how long it takes, please think about how your performance would be effected if you had a 1000% increase in your business, whatever that business may be. Right now refinance applicants need to kick back, wait, turn in whatever paperwork is requested, and look for the call that says it is all finally over and settlement is ready to happen. Complaining about it only makes it worse, and will not speed up the process.

Most important things to remember

The most important things to remember is a high volume refi mortgage market are:

-deal with someone reputable, that you trust, have worked with before, or were referred to.

-make sure your interest rate is locked-in for a long enough period to cover the loan processing time frame, which for a refi is usually going to require a 45 or a 60 day lock-in.

-turn in all paperwork immediately, DO NOT DELAY.

-when the appraiser contacts you to gain access to your property to do the appraisal inspection, drop everything and get them in the home right away!

-consider working with a mortgage broker, a small bank or a mortgage banker, since large banks are notoriously taking the longest time to underwrite loans, by a wide margin.

Conclusion

I know it sounds like a hurry up and and wait situation, and it is. But, if a bank will take 40-45 days or more to process, underwrite, approve and prepare closing documents, why give them an excuse to miss the lock-in deadlines? Then they may tell you that since the lock-in deadline is past, you now must pay a higher rate. So…keep pushing the ball back in their court, and “hurry up, and wait.”

interest rates

Latest Bond Market Report – January 2020

The 10 Year Treasury Bond was at 1.822% on January 10th 2020.

It was 1.847% as of October 28th 2019.

So you can see that rates have been fairly flat for the last 2+ months.

The 10 Year Treasury Bond is not a direct correlation to mortgage rates. It is simply good to know historical information on Treasury bond rates.

Read More

interest rates

Latest Bond Market Report – June 2019

The 10 Year Treasury Bond was at 2.08% as of last Friday*. This is the lowest it has been in a long time.

QUESTION: But what does this mean for mortgage rates?

ANSWER: In general, mortgage rates are flat recently, but down over the last few months.

QUESTION: Do mortgage rates rise and fall in lockstep with the 10 Year Treasury Bond?

ANSWER: No.

QUESTION: What variables affect mortgage rate quotes.

ANSWER: Loan size, loan type, property type, credit score, down payment, debt ratios, and more.

Where are the 10 Year Treasury Bond, and more importantly mortgage rates, headed next? Check back here to see!

*The source for the 10 Year Treasury Bond quote comes from here: https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx

interest rates

Latest Bond Market Report – October 2019

The 10 Year Treasury Bond was around 1.8% as of October 28th 2019.

The 10 Year Treasury Bond is not a direct correlation to mortgage rates. It is simply good to know historical information on treasury bond rates.

On August 2nd 2019 the 10 Year Treasury Bond was 1.846%.

On September 3rd 2019 the 10 Year Treasury Bond was 1.461%.

Below are some interesting historical numbers:

In 2018 the average yield of the 10 Year Treasury Bond was 2.91%.

In 2017 the average yield of the 10 Year Treasury Bond was 2.33%.

In 2007 the average yield of the 10 Year Treasury Bond was 4.63%.

In 1997 the average yield of the 10 Year Treasury Bond was 6.35%.

In 1987 the average yield of the 10 Year Treasury Bond was 7.18%.

In 1977 the average yield of the 10 Year Treasury Bond was 7.42%.

Where is the 10 Year Treasury Bond headed next? Stay tuned!

*The source for these numbers comes from:

https://www.macrotrends.net/2016/10-year-treasury-bond-rate-yield-chart

and

https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx

Deal Of The Day Sale

Let’s Get A Better Deal At All Costs

I have had clients who always think, “Let’s get a better deal at all costs”. I had clients who applied for a refinance almost 4 months ago. Interest rates dropped for quite a bit of that time period. It seemed like once a month they were asking me for a better deal than I had originally locked them in at. Getting a better deal is fine. Steamrolling everybody in your path to pick up each 1/8% rate drop is another. Read More

long line of people

Long Wait To Refinance

Mortgage pipelines are backlogged thanks to record low rates. And rates simply keep breaking new records. This has created delays for many consumers trying to take advantage of low mortgage rates by refinancing. Customers of big banks report that they are unable to get a call back. One bank told a client that they would return the client’s call in 2-3 months! Read More

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Mortgage forbearance

Forbearance – you should only do it if you absolutely have to. Some people are taking a forbearance on their mortgage as a way to take a break on their mortgage payment when they really do not need to.

Forbearance does not mean you can skip mortgage payments and never pay them back. You have to repay any missed or reduced payments in the future. So, if you’re able to keep up with your payments, keep making them.

It will also impede your ability to refinance. Having a forbearance on your credit report means you cannot get a new mortgage. You have to bring the loan current to do so. Read More

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Mortgage Forbearance in 2020

Forbearance, only do it if you absolutely have to. Some people are taking a Forbearance on their mortgage as a way to take a break on their mortgage payment when they really do not need to.

But forbearance does not mean you can skip mortgage payments and never pay them back. You have to repay any missed or reduced payments in the future. So, if you’re able to keep up with your payments, keep making them.

Taking a forbearance will also impede your ability to refinance. Having a forbearance on your credit report means you cannot get a new mortgage. You would have to bring the loan current. Read More

lock and key

Mortgage Interest Rate Lock-In Information

You would think locking-in an interest rate for your mortgage is a very simple process. What is there to think about? You are given your choices, and you pick one and lock-in. Right? Not much to it?! It’s amazing what the average consumer doesn’t know, and what they should be thinking about. Read below to learn about what will be important for your next mortgage application and interest rate lock-in. Read More

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Mortgage Paperwork Is Getting Easier

Here at Capital Bank Home Loans we have a new dynamic loan application that we use, to help ease the mortgage paperwork. Being dynamic means that it can potentially verify your assets and income during the application process, allowing you to avoid having to upload any documents. And of course we all love to avoid mortgage paperwork!

Read More

Savings Budget Investment

No cost refinancing a.k.a. no cost refi

I frequently have people ask me for “one of those no-cost refi’s”. Some people think that mortgage lenders are so hard up for business that they are willing to lose money and simply pay the closing costs for the mortgage borrower. I don’t know of any businesses where losing money is part of the process of making money. A no-cost refi actually comes with a cost…a higher interest rate.

The reality is that a no-cost refi is one where the closing costs are built into a higher interest rate. Read More

Mortgage prepayment versus recast

Prepayment Versus Recast

When you divvy up your monthly budget pie, housing is very likely the biggest slice, especially after you add in utilities, maintenance and of course, your mortgage.

So wouldn’t it be great if you could lower your mortgage payments without refinancing your loan? Or better yet, pay off your mortgage ahead of schedule? Read More

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Refinance Questions

Do you have refinance questions? There are a lot of questions about refinancing, or at least there should be. The questions a consumer should be asking of a mortgage professional are numerous. Read More

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Refinance To An Interest Only Loan?

I always felt like an “Interest Only” loan (where you pay no principal and are only making the interest payments on the loan) was like taking your house and putting it on a credit card. I was never a big fan of these loans. As a result I never did many because clients always sensed my unease, and ended up going to the competition who talked these loans up as a great way to “get in the market.” Read More

Refinance

Should I Refinance?

Should I refinance? It seems like an easy question, doesn’t it? But I have read and heard so many different stories, rules of thumb, and methods to calculate whether or not one should refinance it is mind boggling. It is simple, forget all of the rules of thumb that you have heard.

Refinancing is all about asking yourself how much do you have to spend to refinance, and how much would you save. Figuring out what the recapture period is will help you decide if you should refinance or not. Read More

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The Best Mortgage Rate

Often a client will start a mortgage loan conversation with, “I need to get the best rate.” And that often confuses me. What does the “best rate” mean? Does that mean you won’t work with a lender who doesn’t have the very lowest interest rate on the day you are ready to lock-in an interest rate? Does it mean you won’t give any consideration to experience, execution, responsiveness and delivery?

Would most people work with a mortgage lender willing to lose money? Read More

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The Refinance Boom is not Over? Refinance Your 15-Year to a 30-Year!

Actually, the refinance boom is indeed over. However, there are a fair amount of people that still need to refinance. For example, I know of many people who have excellent interest rates on a 15-Year fixed rate mortgage. They thought they would be in their home forever and wanted to get the mortgage paid off over a shorter term. But now have suffered a job setback or some other sort of financial blow, and need to revert to a 30-Year mortgage to reduce the monthly payment.

Let me give you an example.

Let’s assume the following:

• A homeowner owns a home with a $300,000 loan that was refinanced at the bottom of the market in late 2012 or early 2013. And it has a 3.00% 15-Year fixed rate.
• He currently owes $284,000.
• This principal and interest payment is $2,071 not including taxes and insurance.

What is the outcome?

If this homeowner refinanced the current principal to a 30-Year fixed rate today at 4.625%, the principal and interest payment would be $1,460. This would save over $600 a month! I’d hate to see someone lose a 15-Year mortgage, which enabled them to get their mortgage paid off quickly. However, if economic problems have struck someone and they need monetary relief, refinancing to a 30-Year fixed rate mortgage might be the answer.

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The Refinance Boom is not Over? Refinance Your 30-Year to a 15-Year!

Actually, the refinance boom is indeed over. However, there are a fair amount of people that still need to refinance. For example, I know of many people who have excellent interest rates on their 30-Year fixed rate mortgages, and plan to be in their home for a long time or possibly forever. These people should consider giving up their low 30-Year fixed rate. They can get a still quite low 15-Year fixed rate and save a small fortune over time. Read More

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The Refinance Boom is not Over? Refinance Your ARM to a Fixed Rate!

Actually, the refinance boom is over. However, there are a fair amount of people that still need to refinance. The problem is that the people that have not refinanced when rates were low simply don’t realize that they should still refinance. The people that obviously needed to refinance have already refinanced, in some cases multiple times. There are many people left that can refinance.

Read More

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The Refinance Boom is not Over? Refinance Your Fixed Rate to an ARM!

Actually, the refinance boom is indeed over; however, there are a fair amount of people that still need to refinance. For example, I know of many people who have decided to move sooner than they imagined. I hear of consumers who thought that they would live in their homes for the long haul, but then due to circumstances that were a surprise to them, they have now decided to leave in the next few years. Read More

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The Refinance Boom is not Over? Refinance Your HELOC!

Actually, the refinance boom is indeed over. However, there are a fair amount of people that still need to refinance. There are a stunning amount of home equity lines (HELOCs) outstanding and most people will need to refinance those. Most HELOCs were set up so that the first ten years of the loan only require interest only payments and no principal is due. Then, in year 11, the principal would start to amortize. And it amortizes over 20 years, not 30. This is a problem because Read More

Refinance

Time To Refinance To A 15 Year Mortgage And Save Money?

Time To Refinance To A 15 Year Mortgage And Save Money? Is it time to refinance and save money? Maybe. I have a lot of clients who call me with 30 year fixed-rate mortgages and think that just because interest rates have dropped a lot they are going to switch to a 15 year mortgage and keep their payments the same, and cut a lot of years off of their mortgage. This is likely not going to happen. Take a look Read More

Refinance

Underwater Mortgage? Refinance Soon, HARP Expires End of 2016!

 

The Home Affordable Refinance Program (HARP) is a mortgage assistance program, set up by the Federal Housing Finance Agency in March 2009 to help underwater and near-underwater homeowners refinance their mortgages.

After the housing market crash in 2009 many homeowners were faced with a situation where their house was considered “underwater”. In this scenario, the house value was less than the mortgage loan cost, in other words, having a negative equity value in the home. Refinancing was not an option, nor was selling the home unless they paid the lender for the difference. Unfortunately, this lead many homeowners into foreclosure. Read More

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VA Cash-Out Refinance To 100% Loan-To-Value

A VA cash-out refinance can be used for many reasons. There are a few important things to know about cash-out refinancing to 100% loan-to-value (LTV) when using your VA eligibility.

On a VA cash-out refinance to a 100% LTV the 100% must include the VA funding fee. Read More

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VA Refinance Recoupment Period

The United States Department of Veterans Affairs requires that the closing costs on a VA refinance be recouped in 36 months or less. If the recoupment period is over 36 months the loan will be rejected.

In other words, the refinance closing costs divided by the monthly savings has to be 36 or less.

For example, if the closing costs on a VA refinance are $3,000. And the monthly savings on the refinance are $400 a month. The recoupment period is 7.5 months because $3,000 divided by $400 a month in savings = 7.5. This is well within 36 months. Read More

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What is a COVID VOE?

Mortgage lenders are now required to confirm that you are still employed prior to closing on a mortgage, three business days prior in fact. Mortgage lenders are always required to verify that a borrower has not lost their job, been furloughed, laid off, or had their income altered prior to closing because it impacts their ability to repay the loan. Previously, lenders were able to document a borrower’s employment 10 calendar days prior to settlement. Read More

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When Refinancing Consider Life Of Loan Costs!

When refinancing consider your life of loan costs. Refinancing doesn’t save you money unless you calculate in the interest that you’ve already paid. Especially when you think you’ll own the house for the long haul or forever. If you pay $2,500 a month in principal and interest, you are going to pay $900,000 over the life of a 30-year mortgage. If you are 4 years into the loan and are going to refinance to a principal and interest payment of $2,800 you are going to save $200 a month, correct? Wrong! Read More

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Why Can’t I Refinance? I Make My Payments Now…

I often get asked, “Why can’t I refinance? I make my payments now”. Rates are still very, very low by any measure. Even though they have gone up some in the past few months, rates are low. We went through a refinance boom in 2010. But there are still plenty of people who want to refinance. Many of them can, and some cannot. Why can’t they? Read More

Work with individual or a team

Work With An Individual Loan Officer or A Loan Officer Team?

Should you work with an individual Loan Officer or a Loan Officer team? This discussion will stir up some controversy. I will likely get some angry comments as well as some supportive comments. Keep it classy, and let’s discuss! Read More