Category: Mortgage and Financing
…getting a loan pre-approval so you know what you can truly afford (what you should know about the mortgage process.)
(or getting the proof of funds letter from your bank if you are not taking out a loan – cash buyer).
| In many markets across the country, the amount of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search. Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach. Freddie Mac lays out the advantages of pre-approval in the My Home section of their website:
One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.” Freddie Mac describes the 4 Cs that help determine the amount you will be qualified to borrow:
Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.
Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.
|…but for how long?
The interest rate you pay on your home mortgage has a direct impact on your monthly payment; The higher the rate, the greater your payment will be. That is why it is important to look at where the experts believe rates are headed when deciding to buy now or wait until next year. The 30-year fixed mortgage rate has fallen half a percentage point since the beginning of the year and has remained at or below 3.5% for the last 11 weeks according to Freddie Mac’s Primary Mortgage Market Survey. The chart below shows how far rates have fallen this year (on the left), and uses an average of the projections from Freddie Mac, Fannie Mae, the Mortgage Bankers Association and National Association of Realtors (on the right). As you can see, interest rates are projected to increase steadily over the course of the next 12 months.
How Will This Impact Your Mortgage Payment?
Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly. According to CoreLogic’s latest Home Price Index, national home prices have appreciated 6.0% over the last year and are predicted to be 5.4% higher next year. If both the predictions of home prices and interest rate increases become a reality, families will wind up paying considerably more for their next home.
Even a small increase in interest rate can impact your family’s wealth. Meet with a local real estate professional to evaluate your ability to purchase your dream home.
How to Read Your Credit Report
Do you know your current credit score? Before you even look at properties, if you are taking out a home loan, you will need to obtain a loan pre-approval. There are various factors that determine what you can afford and your credit score plays a big factor. Some buyers think they can afford more, or that their credit score is better than it is, so it is a good idea to obtain your credit score as soon as possible.
Learn more about your credit report from this Time video:
You will have to obtain a home loan pre-approval (if you are taking out a loan) or provide proof of funds (if you are cash/not taking out a loan) in order to look at properties; however, a loan pre-approval is not always a loan approval…mainly because applicants may not always follow important steps in obtaining a loan and being qualified.
Make your loan application process go more smoothly by starting with this as a guideline, provided by Rebecca Mott and her team at Guaranteed Rate. This is just a start – talk with your lender in detail and look around to find the best lender for your needs.
(click image to enlarge)
|VP of Mortgage Lending/New Construction Specialist|
The Federal Saving Bank shares reports on how housing inventory is rising to meet demand.
According to a July 17th joint release from the U.S. Department of Housing and Urban Development and the U.S. Department of Commerce, construction increased in June 2015. The Federal Savings Bank thinks this jump in construction will also meet the rising demand for housing as first-time home buyers decide to invest in real estate.
Construction increases in June
The volume of building permits in June jumped 7.4 percent when compared to the previous month. The number of authorized privately-owned housing units was also 30 percent higher on a year-over-year basis.
In addition to building permits increasing during the month of June, the total number of housing starts rose 26.6 percent from the previous year.
The joint press release also indicated housing completions of privately-owned structures increased 22 percent when compared to June 2014.
According to The Wall Street Journal in a July 17th release titled “Apartment Demand Drives Home Construction”, multi-family housing was the primary driver of new construction. In fact, the number of new condos and apartments increased 29.4 percent in June when compared to the previous month.
Demystifying the Mortgage Process: Your complete 6-step guide to getting a home loan
Would you like to get a better grasp on what is involved in getting a home loan?
Compliments of Guaranteed Rate, this easy-to-understand 28-page ebook answers all the questions you may have been afraid to ask about the mortgage process. Just enter your info and hit the green download button.
Quick Tips for Getting Started on Your Home Purchase
Buying a home can be a complex process, but it doesn’t have to be. With a little preparation, you can save a lot of time and hassle by having all of your documents ready when your mortgage professional needs them.
To start with, the lender will need personal information to verify employment for you and your co-borrower (if there is one). They will also need information regarding all of your debts and assets.
In order to expedite the paperwork process, start gathering the following items:
– Most recent paystubs for one month.
– W2s from the last two years.
– Signed copies of your last two years’ tax returns, including all schedules that were filed.
– Homeowner’s insurance company name and number.
– Most recent bank statements for two months.
– Most recent statements from any retirement and investment accounts for two months.
What costs are involved?
Within 3 days of your application, your Loan Officer must provide you with a good faith estimate of closing costs. Along with any down payment, you will have to pay closing costs at your closing as well. This is a brief rundown of some of the fees that could be associated with your new mortgage:
– Application/Processing Fee – Charged by the loan officer to process your loan application.
– Appraisal Fee – Charged by the appraiser to determine the current value of the property.
– Closing Fee – Charged by the closing agency (escrow, attorney, title) to ensure the close of your transaction.
– Credit Report Fee – Charged by the credit reporting agency to provide your credit report to your loan officer and/or lender.
– Title Search/Title Insurance Fees – Charged by the title company to ensure the property is free from liens or title defects.
– Origination Fee – Paid to the originator to obtain a lower interest rate. This is usually expressed in the form of points. One point equals 1% of the loan amount.
– Discount Points – Paid to the lender to secure a lower interest rate.
– Miscellaneous Fees – VA and FHA loans may have other fees associated with them.
– Private Mortgage Insurance (PMI), document preparation, notary, recording and tax service are other fees which may fall under this category.
Let us help you evaluate your personal situation and assist you in finding the loan program that works best to meet your individual goals and needs. This is brought to you by: Pamela Jackson, Mortgage Banker, PHH Home Loans
Phone: (630) 881-4378 Fax: (630) 757-6622 License:NMLS#346456 email@example.com
Fixed-rate mortgages fell back near yearly lows again this week, lowering borrowing costs for home buyers and refinancers. The 30-year fixed-rate mortgage averaged 3.99 percent this week, Freddie Mac reports in its weekly mortgage market survey.
“If you are planning to buy a home in the next year, it’s better to do it sooner rather than later,” Frank Nothaft, Freddie Mac’s chief economist, said in the video commentary embedded here.
Freddie Mac reported the following national averages with mortgage rates for the week ending Nov. 20:
- 30-year fixed-rate mortgages averaged 3.99 percent, with an average 0.5 point, dropping from last week’s 4.01 percent average. The 30-year fixed-rate mortgage dipped to 3.97 percent in mid-October, its lowest average so far this year.
- 15-year fixed-rate mortgages averaged 3.17 percent, with an average 0.5 point, decreasing from last week’s 3.2 percent average. A year ago, 15-year rates averaged 3.27 percent.
- 5-year hybrid adjustable-rate mortgages averaged 3.01 percent, with an average 0.5 point, falling slightly from last week’s 3.02 percent average. A year ago, 5-year ARMs averaged 2.95 percent.
- 1-year ARMs averaged 2.44 percent, with an average 0.4 point, inching up slightly from last week’s 2.43 percent average. Last year at this time, 1-year ARMs averaged 2.61 percent.
Source: Freddie Mac