I spoke with Jason Yui of Supreme Lending about what his company offers and to ask him some common questions about home financing and mortgages.
Today I want to share with you a conversation I had with Jason Yui from Supreme Lending to let you know a little bit more about what he and the company can do for their clients.
(Joe) Tell me a little bit about the company you’re with.
(Jason) Supreme Lending is a direct lender that funds roughly $8 billion to $9 billion dollars worth of residential home loans per year. I’m a senior loan officer who specializes in the Bay Area, but I’ve done loans all the way from Redding to San Diego—my license covers the entire state of California.
Let’s say that I’m a first-time homebuyer. What steps would you recommend that I take?
With first-time homebuyers, it’s always important to get educated. The first thing I do is learn more about their family and their home goals—how long they’d like to live there, how much of a down payment they’d like to use, and what their expectations are for the loan experience. They need to be informed about the upfront and closing costs, as well as the time frames to complete the entire transaction.
My suggestion is to find an experienced lender they can trust who can guide them through the whole process from pre-qualification to the closing of their home.
What are some common issues that you see pop up during escrow?
Well, hopefully I’ve done my job correctly and the borrowers have been counseled on the do’s and don’ts of the mortgage process. There are, obviously, certain occurrences that are unavoidable, such as the loss or changing of a job.
The most common issue I’ve seen is that of our clients moving money from account to account without notifying the loan officers. This complicates the transaction because we need a paper trail for all of the funds used in the transaction.
What does the pre-approval process look like?
I’ve put the process together into roughly 12 steps that go from pre-qualification to closing.
First, I like to do an hour-long consultation with clients to learn more about their family, etc. Then I can basically pre-qualify them on the spot. After that, I’ll take them through the actual process and let them know what we’ll need for the transaction, as well as what their expectations are.
For an underwritten pre-approval, you will submit full loan documentation to your loan officer, who will process and underwrite it with the same underwriter you’ll use for your actual loan once you’re under contract. This will allow you to shorten the close of escrow times for your transactions so that you can submit stronger offers. With a regular pre-approval, the timeline is about 21 to 30 days. However, it could be as few as 13 days.
These days, the market is just so competitive that we have to provide the most leverage possible to our clients, which means we do all the upfront work in advance—we verify all their documentation and give them the best opportunity to win the home they desire.
What types of loans do you offer?
We have about 150 different loan programs available at Supreme Lending. We can find a home loan for every purchase or refinance loan scenario. We offer jumbo and conventional loans such as Fannie Mae or Freddie Mac, and then we have government loans like FHA, VA, and USDA loans. A jumbo loan, for those who don’t know, is any loan that’s over the conforming limit in that county, which vary from county to county.
FHA and VA loans are government loans for people with certain credit issues. FHA loans will generally provide you with more lenient guidelines, which allow you to put down a lower down payment, and they will often qualify people with lower credit scores. VA programs are specifically for veterans, and they allow them to purchase a home with as little as 0% down.
What’s the difference between a fixed-rate and an ARM?
In a fixed-rate mortgage, the rate and your payments stay the same for the life of the loan. On an adjustable rate mortgage (ARM), the rate and payments fluctuate. There is an initial interest rate on an ARM that will change periodically based on the loan terms.
Most of our borrowers are electing to choose a 30-year fixed-rate mortgage, but I’ve also seen a slow adjustment in the current market, so there are some people utilizing ARMs to get a lower rate and payment. Most people using an ARM are people like first-time homebuyers who are purchasing a condo to live in for three to five years with plans to sell that condo and use the proceeds for a down payment on another home.
What is the difference between an interest rate and an annual percentage rate?
I understand that this can be confusing. The interest rate is the actual rate that determines your monthly payments. In general, the APR flexes not only the interest rate, but any points, fees, or costs that you pay to get the loan. For that reason, the APR is higher than your interest rate, but only the interest rate will determine your monthly payments for your home loan.
Tell me about mortgage insurance.
Mortgage insurance depends on how much you put for your down payment and the loan program you choose. If you put less than 20% down, some programs require you to take mortgage insurance. There are programs available that don’t require that, as well.
How do these programs work? Well, with 20% down, your interest rate would be at a certain point, but with a lower down payment, such as 5% or 10%, the rate will be a little bit higher. They basically absorb the cost of that mortgage insurance and give you a higher interest rate.
We also have programs that will allow you to put 5% down for a jumbo loan up to $1.5 million. These are programs that definitely require you to have a higher income, but it allows people with relatively low down payments to be able to get into a home.
If you have any questions for Jason, feel free to give him a call at (650) 280-2215 or send him an email at [email protected]. If you have any other real estate questions for me, you can give me a call or send me an email at any time. We look forward to hearing from you.