Community Building in the Washington, DC area!!

SFP Editor: How did you get involved in the mortgage business? Paul M. Nagel: I enjoy helping clients, wanted a lot of variety and constant challenges, and have a good deal of experience structuring financial transactions, so mortgage banking was a natural career choice for me. When I was in a position to make the career move, I looked into 300 (actually 297) of the mortgage companies in the area, I found First of America was hands down the best organization, for many reasons. I was lucky enough for them to take me on board, and the rest, so to speak, is history.

SFP Editor: What did you do before you present job?

Paul M. Nagel: I voluntarily retired from Marriott before joining the mortgage industry, where I ran the finance department for Marriott's second largest business. Prior to that position, I assisted in working with Wall Street Investment Bankers to spin off a NYSE listed company, evaluated international hotel transactions, assisted in negotiation and development of domestic and international airport / toll road concession contracts, and even evaluated the viability of several resort golf courses. While mortgage banking is less complex than structuring corporate transactions, I have found it much more personally rewarding.

SFP Editor:Do you own a home and how did you go about getting your loan?

Paul M. Nagel: Yes, I've owned a condo for many years. At the time, I did not know any loan officers, so I went with the recommendation of my real estate agent. Unwittingly, this was a wise choice. Since realtors' income depends on obtaining financing for the home (they don't get paid unless the home is sold), realtors only deal with the top professionals. Not to sneak in a plug, but over 90% of my business is realtor referred.

SFP Editor: What is credit Report?

Paul M. Nagel: : Credit history is maintained by at least three separate credit reporting companies ("bureaus") on everyone in the country, and a credit report summarizes that information for a lender prior to making you a loan. From the lender's perspective, its composed of three main components: [1] a list of all your debts (e.g. credit cards, mortgages, car loans, etc.), [2] whether you have any tax liens, judgements or bankruptcies and [3] your credit score (aka fico score). Your credit score is intended to be a close to a report card on your overall reliability and is a significant factor in whether you qualify for a loan. There is more stress associated with credit scores than really necessary - if you pay your bills on time (with a only a few exceptions), have reasonable levels of debt and no huge averse credit events (i.e. bankruptcy) in your past, you should be fine. Even exceptions to the above are often OK. In addition, credit scores change over time; so, if you have had bad credit, simply maintaining good credit from this point forward will eventually improve your scores. The flip side, and very important, fact is that all too often negative things that should have been removed from your credit report, and in some instances (especially with common names like "Smith"), incorrect items have appeared on reports. I can't emphasize enough that one of the most important reasons to become pre-qualified for a mortgage a week or so before you visit houses with your realtor, is to ensure that your credit report really contains your correct information and gives some time to clear up if this is not the case. Last, a credit pulled by a lender such as myself does not impact your credit report. This is the most common myth I run into on a regular basis. I have researched this thoroughly, as this is often a concern of my clients.

SFP Editor: What are "points" (and what is a point) (and why quotes on daily news only tell half the story)?

Paul M. Nagel: The technical definition is that "points" are pre-paid interest and that one "point" equals 1.0% of your loan amount paid to the lender at closing. On a practical level, the more points you pay, the lower annual rate you will obtain. For example, you could lock a rate of 7.25% and pay zero points, or lock a 7.00% rate, but pay one point.

This is important, because the rate you select is completely dependent upon the number of points that you pay. Hence, I would be telling only half the story to my clients if I only quoted an interest rate and did not mention the number of points (if any) that corresponded with the rate.

The above instance is where the media can be misleading; they quote interest rates all the time without any mention to points whatsoever. Not to put too fine a point on it, I find this terribly irresponsible. If you want to find the real average rate and points for the week, go to the following web site http://www.freddiemac.com/pmms/ This provides the average rate for the week (the one quoted by the media), and also gives you the average points for the week. Hence, it gives you the full picture.

SFP Editor: When should one use internet lenders?

Paul M. Nagel: Honestly, I love internet and 1-800 lenders. They provide me with a good source of business when they cannot close a loan for the purchase of a home and I get to pick up the pieces. Invariably, the individuals that I assist to purchase their home at the last minute, become loyal customers and a great referral source.

From a buyers perspective, the best situation to use an internet lender is for a refinance, as there are no significant inconveniences should your refinance does not close as promised. If your purchase is delayed, however, you may wind up having all your belongings in a truck for three days while you live in a hotel until your loan closes.

Even in the cases of re-finances, you should only consider an internet lender if you have a rather high frustration tolerance. I would strongly recommend anyone considering an internet lender to talk to several closing attorneys and / or real estate agents to get an unbiased perspective. With that knowledge, an individual can then best determine if the pleasure is truely worth the pain and inconvenience.