Living in Contra Costa County

Understanding the mortgage process is a constant frustration for consumers. One can search the web and find all kinds of long articles breaking the mortgage loan process into anywhere between 6 and 9 individual steps. Upon reading these, a consumer gets even more confused since each individual step is confusing in and of itself. Unfortunately, the wrong question is likely getting answered in these articles. Most mortgage clients don’t want to become experts on the minutia of processing and underwriting, they just want to know where to start and have an accurate context for why everything happens as it does. The answer for each of these questions lies in the same place.

The mortgage process begins and ends in the same place, with the mortgage loan application. It is filled out and signed at the beginning and updated for signature at the closing. But here’s the key point; every step of the mortgage process is dedicated to verifying a fact or validating an assumption on that was disclosed on the initial loan application. The loan application is broken in to 10 straightforward sections:

1) Mortgage type and terms requested

2) Property information and loan purpose

3) Borrower information

4) Employment information

5) Monthly income and housing expenses

6) Assets and liabilities

7) A summary of the credits (i.e. earnest money and the mortgage) and the costs (i.e. purchase price and closing costs) of the transaction

8) Miscellaneous affidavit section (this covers intent to occupy the property, citizenship and other items)

9) The agreement section (this is the fine print legalese and where the loan application is signed)

10) Information for government monitoring (this covers race, ethnicity and gender)

Nearly all documents a borrower is asked for or asked to sign will directly or indirectly relate to this document. Nearly all of the 3^rd party reports and vendor services used in the loan process will directly or indirectly relate to this document. Throughout the process, as new or updated information is obtained by the lender, the application is updated and re-reconciled with underwriting guidelines. In short, almost all of the mortgage loan process is a collection of acts designed around verifying facts or validating assumptions in this document; the loan application.

Knowing this, what should a prospective borrower seek to do?

If asked to fill out an online application, a paper application or do one face to face with a loan officer. . . be thorough when the initial loan application is filled out. For instance, if there is approximately 11 thousand dollars in a savings account, don’t put 11 thousand dollars on the application if the real figure is 10,771.41. Use 10,771.41 as the figure for the application. If the income is approximately 4000 a month but in reality its 4166.67, make sure the figure on the initial application is 4166.67. Also, insist that your loan officer be accurate on the initial loan application. If you see errors, however small, make sure that he or she corrects them immediately. Don’t tolerate sloppiness.

This may seem like a tedious way to start the mortgage loan process but it has down line consequences. Benefits of an accurate initial loan application include better loan recommendations, faster processing, faster underwriting, a more predictable transaction but most of all . . . fewer if any surprises.

Sure the loan process has a lot of confusing moving parts but if you want to keep it simple, just know that it’s almost all about the accuracy of the loan application and you’ll be way ahead of the game!

Charles Dailey - iLoan - NMLS ID# 79048 - CA DOC, MN DOC & WI DFI - 612.234.7283

 

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer's search criteria.

 

Often I am asked which is a better loan for a homebuyer, A HomePath Mortgage or a FHA Loan?  It is actually not a clean cut answer for everyone.  So I wanted to take the time to go over the benefits of each.  And what you need to think about when making a decision between a HomePath or FHA mortgage.  Keep in mind this is only in regards to buying a Fannie Mae Foreclosure. 

HomePath Mortgage

The HomePath Mortgage Program is a GREAT program if you are looking to only purchase a  Fannie Mae foreclosure.  The benefits are:

• No mortgage insurance- this allows you to buy more home and/or have a lower mortgage payment.  To offset the lack of mortgage insurance the interest rate will be much higher than FHA loans
• No Appraisal- this saves the buyer the cost of an appraisal($400+).  More importantly it allows the buyer to buy a home that may need some minor work/repairs.  Fannie Mae wants to sell these homes and by not requiring an appraisal it allows the home to get financed without having to fix any issues
• Down Payment is as little 3%
• Seller contribution is allowed to go up to 6%, or 9% with a 25% down payment
• Real Estate Investors qualify for just a 15% DOWN PAYMENT, this is great since investment property loans now require a 20-25% down payment. 

Please keep in mind you must qualify for a conventional loan to qualify for a HomePath mortgage and have a minimum fico of 660 for the lower down payment options and min 620 score for 20%+ down payment.  Most MLS listings mention if the home qualifies for the HomePath program, but if you would like to check to see if a property qualifies you can go to www.homepath.com. 

FHA Loan

The mortgage rate on a FHA loans are generally lower than market rates, while down payment requirements are lower than for conventional loans.

Some of the other benefits of FHA financing:

• Only a 3.5% down payment is required.
• Closing costs can be paid by the seller. Up to 6%
• More flexible underwriting criteria than HomePath loans, such as allowing lower credit scores,  allows high debt to income ratios, etc

Conclusion

Only compare these two options if you plan on buying a Fannie Mae Foreclosure.  The HomePath loan is great if the home needs repairs or work, since there is no appraisal needed.  And without an appraisal the lender will not know or be concerned with the condition of the home. While a FHA loan would obviously require some repairs to be done, if they are major, etc.  And now let’s compare them directly to each other.  If you are buying a home of $250k and are putting a down payment of 5%, a HomePath Mortgage would give you a lower payment by $70.  This example is using an interest rate of 3.75%(30 year) on a FHA loan and 4.875%(30 year) on a HomePath loan. 

Everyone’s needs and financial goals are different, so before making a decision for yourself contact a knowledgeable mortgage professional.   And ask that Lender for mortgage estimates for both loans.  And if you live in Texas, contact Dave Your Mortgage Guy.  This is just another great example of it being in your best interest to know all your mortgage options!!

 

 

 

 

David Krichmar 

Mortgage Banker/Broker

AmericaHomeKey, Inc

Blogger For Realtor Magazine, Houston Agent Magazine

Approved MCE Instructor

Office:832-689-6012

David.Krichmar@gmail.com

www.DaveYourMortgageGuy.com

For More Mortgage Info and Social Media Tips For Realtors Follow me at  Dave's Blog

DaveYourMortgageGuy.com is Voted the #1 Mortgage Company in Houston, Texas.  2011

If you are looking for a FHA, VA, USDA, Homepath, Conventional, Jumbo, Construction, FHA 203k mortgage in Fort Bend County, Sugar Land, Houston, Katy, Harris County, Brazoria County, Pearland, The Woodlands, Kingwood, Tomball, Spring, Conroe, Montgomery County or anywhere in Texas I am your GUY!  

              

 

 

 

NMLS#:293883

Use or reproduction of the material published on this site is expressly prohibited without the express written permission of the author

this is really funny! Unfortunately it is a story that does happen....Read my blog post from yesterday http://activerain.com/blogsview/2675329/i-hate-dealing-with-big-banks. We have all had delayed closings and the bigger the bank the more likely the delay... I hope you enjoyed this song as much as I did. This loan finally closed on December 18, 2011. I hope these creative people enjoy their new home. Enjoy!

  Debbie Holmes

Gold Key Real Estate    

(208)761-2551 Email: d5holmes@msn.com

To search Boise Homes visit my website

 

Have you ever bought a car and proudly brought it home only to have the car dealer show up at your house the next day and say – “we’re sorry, we didn’t check your credit before you drove off the lot and now we find you’re not approved.”  Of course not, but how horrible to think about that scenario actually happening! 

Purchasing a home in Colorado Springs isn’t any different.  Knowing that you are initially approved to buy a home saves you time, money and heartbreak.  Understanding what your next steps to homeownership are ensure you make your way from pre-approved borrower to happy homeowner!  

Prequalification vs. Preapproval 

The distinction between the two can be devastating when you discover that the lender did not verify all of the up-front documentation that should have been asked for prior to making an offer. 

Pre-qualification is a basic analysis of income, assets and credit.  It's typically done over the phone in a matter of minutes without any further proof required.    What that means to you is that your lender will not ask for confirmation of income or assets.  Basically, you are not providing any information that says “what I just told you is true.”  Due to this, the lack of verification required in a prequalification leaves a lot to be desired.

Why Get Pre-Approved? 

A pre-qualification is only as good as the information you provide to your lender.  Thus, if the income was over stated or employment history not properly disclosed, your loan process could become quite complicated or worse - your loan could be denied.

Pre-approval takes this basic background check one step further.  Your lender will ask you to provide pay stubs, bank statements and other necessary documentation to make an informed decision. While it doesn't guarantee an approval, it does eliminate many of the last minute surprises. 

When buying a home, it’s better to be safe than sorry.  Get pre-approved before you make an offer and find that the home you fell in love with is well out of your reach.

To learn more: Check out our FREE Top 20 Homebuyer Secrets that can save you thousands of dollars! Plus browse our Home Buying Resources section and fill-out a free no-obligation secure online application or call us in Colorado Springs, Colorado at 719.387.1368 with any questions.

Bad credit or No credit?  Check out our Credit Repair Program and get started on the path to homeownership today!

Overcome loan application stage fright by reading my Simple Steps to a Complete FHA Loan Application

Why PreQualification Just Isn't Good Enough was written by Rebekah Radice.

 

 

 

Rebekah's Mortgage Grapevine (unashamed plug) provides insight, education and musings on anything from mortgage lending and real estate, to social media, marketing and all things relevant to your everday success! If you want to learn lots of cool things, have your thoughts provoked, AND be entertained, be sure to hit the SUBSCRIBE button to the right! 

 

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Rebekah Radice | Mortgage Loan Originator

T: 719.387.1368 | Email: rebekah@rebekahradice.com | Website: http://rebekahradice.com |CO & NMLS Licensee: LMB100010938 & 288596 | Benchmark Mortgage dba Ark-La-Tek Financial Services, LLC | 12 E. Kiowa |Colorado Springs, CO 80903

 

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