Monday, July 16, 2018

5 Ways You Can Simplify the Mortgage Process

In order to shorten and demystify the mortgage process, try using these five tips.

Today I want to provide you with some tips that you need in order to minimize the mortgage process. We know that it can be stressful, but if you heed these warnings, it will go a lot smoother for you.

1. Know your budget. When you’re out shopping for a house, you’ll have a finite number of houses to view, and many people are shopping outside their means. That will cause undue stress. Review your budget and know what is the maximum monthly payment you can qualify for. Once you know that, you can shop with confidence that the houses you’re looking for fit within your range.

2. Plan for the unexpected. Sudden and unexpected issues and pitfalls have a habit of cropping up during the home search process. Perhaps a home that you like is located in a flood zone, or insurance is higher than you thought, or your taxes are slightly off. These sorts of things are why you should work with a professional Realtor and lender to help you navigate these rocky waters.

With great communication, stress is all but eliminated.

3. Learn the process. Meet with your Realtor and ask them for a step-by-step explanation of the process, beginning at pre-qualification all the way through to closing. Do this with your lender as well; understand their process, how they process loans, and what’s expected of you. With great communication, stress is all but eliminated.

4. Shop around for your mortgage.
If you work with me, you won’t need to shop around because I’ll take good care of you. However, with another lender, you need to know how long they’ve been in business, how well they carry out their transactions, how they treat their past customers, and so on. It’s not always about the terms of the loan; it’s about making sure that it’s done and that you’re satisfied with the result. Shopping around will help you find a lender you trust and like.

5. Realize that real estate is like a rollercoaster. There will be high moments and low moments, periods of fun and stress, and you might feel a little sick at the end. But it’s all worth it, and when you get off the ride, you’ll realize that you had an overall good time and, best of all, you own your own house!

If you have any questions or if looking to learn more about the mortgage process, feel free to reach out to me. We look forward to helping you and/or your friends buy homes in the future.

Thursday, June 14, 2018

Getting to the Bottom of 6 Common Mortgage Myths

What six mortgage myths should all homebuyers be aware of? Today we will be covering these common misconceptions.

Today we are going to go over some of the worst pieces of mortgage advice that homebuyers actually believe.

1. Do not bother getting pre-approved. People hear this all the time, but it is absolutely false. Even if you know that your credit is good and that you are financially capable of a home purchase, buyers in today’s market cannot afford to submit an offer without a pre-approval letter. Additionally, getting pre-approved ahead of time will save you from falling in love with a home you can’t afford.

2. You must get a mortgage from the bank you already use. It is a common assumption that if you have an account with a bank, you have to work with that same bank when getting a mortgage. Actually, this is not a good idea in most cases. A better idea is to work with a mortgage professional. These experts have one job: to get you to the closing table.

3. You shouldn’t bother reading the fine print. There is a lot of terminology used in mortgage contracts that might be unfamiliar to most buyers. But this does not mean you should not pay attention to what you sign. If you are not confident reading through all of these documents alone, working with a qualified professional to dissect each page can help you better understand what exactly you’re agreeing to.

A mortgage professional should instead advise buyers to borrow based on what is feasible, not what is possible.

4. You should always go with the lowest interest rate. It may sound strange, but sometimes a higher rate is better. It is more important to look at all aspects of the loan and choose a program that works best for you as a whole, rather than focusing too intently on the interest rate alone.

5. First-time homebuyers are guaranteed free money. Mortgage professionals do love helping first-time buyers, but not all new homebuyers can or will qualify for certain programs. Also, not all first-time homebuyer programs are all that great to begin with. Sometimes a lower monthly payment means more expenses at the closing table, so it is important to consider all aspects of a deal before making a decision.

6. You should borrow as much as you are approved for. The issue with this way of thinking is that what a person qualifies for is not the same as what they can afford. A mortgage professional should instead advise buyers to borrow based on what is feasible, not what is possible.

If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.

Thursday, April 19, 2018

Questions Your Loan Estimate Will Answer for You

When applying for a mortgage, your loan estimate will answer eight critical 
questions you’ll likely have.

Your loan estimate is the most important document you’ll see when applying for a mortgage, and here are the eight critical questions it will answer for you once you receive it:

1. How much am I borrowing?
Your loan estimate will break down exactly what your loan amount is. On the same page, it will also tell you what your cash-to-close amount is and your total closing costs.

2. What’s my interest rate? This document explains, clear as day, what your interest rate is. Remember, the rate your lender gives you is locked in unless you’re getting a “floating” rate.

3. What’s my monthly payment?
Your loan estimate also breaks down your principal and interest payments (i.e., what gets paid to the bank), your tax and insurance payments (what gets paid out to the third parties), and any mortgage insurance or HOA dues. Your HOA dues will not be included in your monthly mortgage payment, and your loan estimate will notify you of this.

4. Is my rate fixed or adjustable? Back in the day, the old loan estimate form wouldn’t say if your rate was fixed or adjustable, but the current one does. In my opinion, you should always get a fixed-rate loan unless you’re an investor.

Your loan estimate should be within $300 to $400 or your actual cash-to-close amount.

5. What are the costs of taking out a mortgage? There are many misconceptions floating around regarding this subject, but there are really only a couple fees you need to shop for. When you’re looking at your fee, your lender will show you what their origination charges are, along with their application, underwriting fees, and other things of that nature. These fees typically range from 0.5% to 2% of the overall cost. The best deals will normally only require a one-time-only fee of $1,500-or-less up front. Make sure when you’re looking at your fees, you’re looking at the overall fees, because the rest of the fees are estimates for third parties which your lender has no control over.

6. Am I being charged points? This question can be construed a couple different ways. Some banks charge an origination point, but you can also pay points that are considered discount points. This means you know you’ll be in your house for a long time and you want to pay an additional fee to reduce your interest rate now to reduce your payment over the life of your loan and save money.

7. How much am I paying for an appraisal? Most appraisals will be paid for in advance by the borrower, and a typical appraisal fee costs between $500 and $700. In most cases, your lender will ask for your credit card in advance so that when it’s time for the appraisal, they can just charge you directly for it.

8. How much money do I need to bring to the closing? The total out-of-pocket dollar amount you need to pay will be broken down on the second page of your estimate document. In most cases, your loan estimate should be within $300 to $400 or your actual cash-to-close amount.

If you have any further questions about loan estimates or you have any other mortgage needs, don’t hesitate to contact us. We’d be glad to help you.

Thursday, April 5, 2018

The 7 Fears That Keep People From Getting a Mortgage

There are seven main fears that keep people from getting a mortgage, but you shouldn’t have any of these fears because there’s no truth behind them.

Most people think they’ll never qualify for a mortgage for a variety of reasons. You shouldn’t be afraid though, because the odds are in your favor—according to Fannie Mae, more than seven out of 10 mortgage applicants get financing and find the house they want. 

However, there are still seven main fears that keep people from applying for a mortgage:

1. I don’t have enough money for a down payment. There’s a huge misconception out there that you have to put down 20% for your down payment. That’s not true. You can get a loan that requires a down payment of just 3.5%, and there are loans out there—USDA loans and VA loans, for example—that require no down payment at all. 

2. I have too much debt. Generally speaking, if you have a lot of debt, that probably means you make a lot of money. It’s not about how much debt you have, though. It’s about what your overall debt-to-income ratio is. In any case, this can be overcome because a lot of people I work with can afford more in terms of their housing payment than their rent and still end up qualifying. In most cases, you’ll be able to qualify for what you want.

3. I don’t make enough money. The money you make doesn’t determine whether you can get a loan or not. That just determines how much house you can buy. If you can find a house to rent for the amount you’re paying, you can find a house to own for the same amount. 

4. My credit score is too low. The average FICO score for a conventional loan is 751, and the average American buyer has a credit score of 685. However, don’t think this is the score you need to qualify. If you’re applying for an FHA loan, for example, you can have a credit score as low as 580. You can qualify for a VA loan with a score of 600. For a conventional loan, you can get approved with a score of 620. 

Don’t worry about having too much debt—there are ways to get you qualified.

5. I don’t want to go through the whole loan process only to get denied at the end. No one wants to fall in love with a house only to find out that they don’t qualify for it, but you can avoid this disappoint by getting fully pre-approved by a lender. To do this, they’ll review your credit, income, and assets. Once you get a full approval, 99 times out of 100, you won’t have any problems and you’ll be able to shop with confidence. Remember to be honest with your lender and provide them with all of your documents up front. 

6. What if I get a loan and get stuck with a horrible interest rate? There really aren’t very many subprime mortgages out there. A lot of lenders are still loaning on the exact same products. Many lenders will offer interest rates within 0.25% of each other, and that margin won’t affect your loan that much. It’s more important to look for a lender who offers the best service—someone who will be with you during the process and after the process. That’s the kind of service my team and me pride ourselves on. 

7. Buying a home costs more than renting. Your landlord’s PITI (principal, interest, taxes, and insurance) is almost always lower than what you’re paying them in rent. The difference between those two things is their profit. When you become a homeowner, that profit becomes yours as you build equity over the long term. It’s also worth mentioning that rental rates have skyrocketed recently. Every year you can face a rent increase, but you won’t face the same thing with a fixed-rate mortgage. 

If you have any other mortgage questions for me or there’s anything else I can assist you with, don’t hesitate to reach out to me. I’d love to help you.