Loan Officer @ O2 Mortgage
2110 South Bascom Ave, Campbell, CA 95008
Hours: 8-6 M-F
Zillow Reviews: https://www.zillow.com/lender-profile/MatthewFalconer/
Hello from Bri Chmel, Realtor® & Owner at Live Love Santa Cruz! It can be confusing to sort through how to buy a home. For most people, the loan process can be one of the most challenging parts. I think it is important to choose a lender that not only gets the job done, but fits well with your personality and needs. Please check out this interview I have done with one of my favorite mortgage bankers, Matt Falconer!
Bri: Matt what company do you work for and what is your job title?
Matt: I work for O2 Mortgage, and my job title is loan officer. O2 Mortgage is a division of a bigger mortgage bank, American Pacific Mortgage. My office is in Campbell, and I live in Santa Cruz. I meet a lot of clients in Santa Cruz, but my loans are done primarily in Campbell.
Bri: I know that many people are not clear about the difference between getting a loan through a bank, an online lender, a mortgage banker, and a mortgage broker. What are they, and what are you?
Matt: A big bank is Wells Fargo, Bank of America, Chase. The pros of a big bank are they are household names. Everybody has heard of Wells Fargo and BOA. They are going to have their own “one” product, the Chase product or the Wells Fargo product. The cons of big banks are that they can treat you like a number. They have a revolving door of clients, and they really just want you to open up savings accounts, credit cards, and car loans with them. They are not going to see you after hours. They are not going to have much flexibility. They are not going to answer their phone calls on the weekend. They are not going to treat you like a person. They will treat you like a number, generally. A lot of top realtors are very leery of big banks because big banks don't do a very good job of pre qualifying individuals. A realtor will look at an approval from a big bank, knowing that big banks aren’t that good at loans. Banks are good at checking and savings. Realtors will often ask clients, "Why don't you talk to somebody else?" A home buyer’s offer will be more prone to be accepted when you're with a reputable broker/lender who is going to close your loan on time. That's just the feedback I've gotten.
Online lenders may reel people in because they offer lower rates. But, they don't do any service. They will issue a pre-approval letter with just a conversation. They don’t ask for verifying documents, they might not even verify credit. They will issue a letter that’s not worth the paper it's printed on because they haven't done their due diligence. They don’t figure out whether or not there are any snags to the loan, any ding on their credit, and they haven't checked any income or tax returns. You can run into trouble once you find a home that you want to buy. A lot of the better realtors will be very apprehensive about taking a client’s pre-approval letter from an online bank, knowing that that's how they operate.
A mortgage banker, since they help a lot less people, can give top notch customer service and super fast turn around times. They make the decisions between just a few people, not ten layers of management. They can call their underwriter and talk to them any time, versus not being able to do that from a big bank. Plus, mortgage bankers have more than just the one product. They have Wells Fargo and Chase, plus fifteen other ones all inside their bank. They can choose to make sure they get the best rate and best product for the client.
A mortgage broker I similar to a mortgage banker, but will send a loan out to a third party and wait for someone else to get it done. They are out there shopping around for it on a broker level.
At O2 Mortgage we have a really cool platform. It's a hybrid between a mortgage bank and a mortgage broker, so we can do both. We do not wear the mortgage broker hat on a purchase transaction of a home because we can't commit to that other person's timeline. With a purchase transaction at our bank it's all done in house. I can commit to super fast timelines, and we are all part of the decision making process- my underwriter, my funder and myself. Whereas a refinance of a home, which usually has a longer timeline and less deadlines, we can broker out.
Bri: Are interest rates the same between all of these lenders?
Matt: Roughly the same. I would say that big banks and mortgage banks have roughly within one eighth of a percent. If people are looking for the cheapest online cut rate, that's the online lenders because they don't offer any service or accountability to the process. It's a roll of the dice if they're even doing their job right, and you get what you pay for. You might get a lower rate, but you really have no idea who's handling your loan or if it's going to get done correctly or on time.
Bri: Do all these have underwriters in house, and what is an underwriter?
Matt: An underwriter is the person that verifies that I've done my job correctly. My team and I will gather documents for a client. Pay stubs, tax returns, W-2s, IDs, bank statements. We type it into a system, and then the underwriter verifies that we input the data correctly, and that the documents are accurate and valid. They're just double-checking our work. A few mortgage bankers have underwriters physically in their office, and others have them at their corporate office. It can be helpful to be able to reach over and tap them on the shoulder and talk to them. We do so many loans we need more than one underwriter, so we have a few. All loans have underwriters, but generally they're not in house. Big banks would never have an underwriter in house.
Bri: What sets you apart from other mortgage bankers?
Matt: People ask me this a lot actually. I will start with what makes us the same. We all sell the same loan products. We all have very similar rates. If people aren't coming to me for a special loan product, and they're not coming to me for the greatest rate, then why do they come to me? I answer that with three things. They come to us because they want to have better communication and service. More importantly than that, because I think people can step it up and do that anywhere, we have a really big focus on what's affordable for the client more than what size loan they qualify for. Everyone says that you're qualified. What are your qualifications? That's just the bank metric that says the bank is okay with giving the client a certain amount of money. We look at it differently. We say, "What about what's good for the client?” We really focus on the affordability aspect over qualifications. That, coupled with a very competitive rate and great service, is what makes us different.
We also get all of the client’s documents in advance, and send the file to the bank ahead of time before there's a property identified. That way, the bank underwrites the file ahead of time and gives our client a very solid pre-approval letter. Instead of being pre-approved, you're fully approved. Everything is in the loan. There are no question marks whatsoever. It's a perfect loan. Now the client just needs to go find a house. We are underwriting the file in advance, which is doing things a little bit out of order.
Bri: Do people usually do that?
Matt: It depends on how fast they want to do it. If we do the underwriting ahead of time, I can close the loan faster. It's not for everybody, because they might be looking later in the summer, or next year, or something like that. The underwriting approval is only good for 120 days. But people that want to be very competitive and are ready to buy now want to make sure that their loan is bulletproof.
Bri: How fast can you close a loan?
Matt: Traditional escrows are 30. Some are as long as 45. We're able to do it in as short as 15 days. Not for every single loan though. Sometimes there are two loans, there's a condo, or there's another third party aspect to it like mortgage insurance. If there's another component to the loan then it can extend from 15 days to 18 or 21, and sometimes it does take 30 days. I'll know how long it will take before I tell someone how long I need to do it. It's all about setting the clients expectations ahead of time.
Bri: You touched on affordability vs. qualifications. Can you give an example?
Matt: We put affordability over qualification. Everything is really specific to the borrower. For example, Joe works for Apple and makes $200k a year. Joe might qualify for a loan to buy a two million dollar home, but does he really want to have that high of a mortgage payment? Other institutions and banks will say, "You qualify for a two million dollar home. Do it!" We would argue. We would talk to Joe and say, "Well, here's what the tax breaks look like. Here's what your payment is going to feel like." We don't want anyone to feel house-poor, or strapped with a payment. You can't live your life. All you can do is barely make your mortgage payment.
We really drill down on what they want their mortgage payment to be. If the client is comfortable at a million dollar loan instead, that's still a very nice house. You don't need to go to two million dollars. First time homebuyers don't always understand all the expenses that go into owning a house. For example, a couple thinks they want to buy an $800,000 home because a bank told them they qualify. But after we walk through the numbers with them they have a little more breathing room at $750k. They can afford to begin to fix up their new place or save for their children’s college fund. A smart overall picture is not to be house-poor. You don't really get that advice from big banks. I ask clients all the time, "Have you been pre-approved before?" They say, "Yeah. I was pre-approved by X bank.” I say, "Oh, did they talk to you about tax breaks? Did they talk to you about affordability?" The answer has always no. It’s never been yes. 100 times.
Bri: Is it an urban legend that you have to put 20%, or a big chunk of money, down?
Matt: We hear that a lot. A lot of people think or believe you need 20% down to get a loan, and that's just not the case. 20% down gets you a loan with no mortgage insurance, but the truth is that you can get a loan with as little as 3% down. Avoiding mortgage insurance is ideal. But if you don't have 20% down, and you have 3 to 5% down, you could still get into a home. It might be better to do that sooner than try to wait however long it would take to save that 20% mark.
Bri: How much extra is mortgage insurance?
Matt: Mortgage insurance varies depending on the property type, credit score, and loan amount. It can be anywhere from $100 to $500 a month. One of the main factors of mortgage insurance is the debt to income ratio. If a person doesn't have a large down payment, but they make a great income, their debt to income ratio is low. They've got plenty of income, so the insurance company isn’t worried about whether or not they can pay the money back. They would get cheap mortgage insurance, versus someone who might have maxed out qualifications. If this is the case, they are going to be very pressed on making their payment. Their mortgage insurance is going to be more expensive, because they don't have any disposable income. Credit scores, condo vs. single family home, and percent down also play into it. The less you put down, the more expensive the mortgage insurance is.
Bri: Walk me through the lending process, as in, what can a borrower expect before and during escrow?
Matt: It all begins with a conversation. I have what we call the discovery conversation with the client to figure out their goals, timelines, and what loan best fits their needs. From there, we gather the documents and get them pre-approved, or fully bank approved like we talked about. From there, it's go time. The loan process happens really fast because escrow is usually 30 days or less. Once a property is identified, everything moves really quickly and smoothly if everyone is responsive to the emails. There are a lot of moving parts to getting a loan. We do our best to keep it as easy as possible on the clients by having a large team. For example, we have 13 people in my office. Only two of them originate loans, and the rest are support staff. I have two people that are dedicated to me to help the clients make sure this process is smooth for them. The team is always at the office to answer a client’s questions. A client can always call me as well.
Bri: What are those documents you ask for to get a person fully pre-approved?
Matt: Pay stubs, tax returns, W2s, and down payment information.
Bri: How long have you lived in Santa Cruz? What part of Santa Cruz do you live in? Why do live there?
Matt: I have lived in Santa Cruz since 1987, so 30 years. I live in Live Oak, right off of 17th Avenue, about a mile away from the beach. I love Live Oak. It's nice and sunny, really close. We can ride our bikes to the beach. I love Santa Cruz. It's got a unique feel, small-town aspect to it. I am nt an ocean person, but I love being out on the coast. It's great to be outdoors in Santa Cruz. I'm not a fan of big cities. It's cheaper to live in Santa Cruz, if you can imagine that, than San Jose so I'll take it any day of the week.
Bri: If you could live somewhere else besides Santa Cruz where would it be?
Matt: I think I'd have to say San Diego, because it's still a coastal, small-town feel, but you can get right into a big city. The weather is great. You still get some sports. They have great food. You can get into some city stuff if you want to, but still get a small beach town feel.
Bri: What are your hobbies outside of work?
Matt: Outside of work, I spend 99% of my time chasing my three kids around. I've got a nine-year-old son named Maxwell, a six-year-old daughter named Grace, and an almost one year old named William. William is in tow with us wherever we go. I coach little league for both kids. I coach basketball for Maxwell. I have coached soccer for both of them, and I make sure I have time for a date night every once in a while with my wife, Carrie, who holds the whole family together. I really couldn't do it without her.