Tag Archives: mortgage

Documents You’ll Need To Get A Mortgage In 2015

You’ve decided to buy a house. Congratulations! You’ve written the offer, and while you’re waiting for the seller to sign you’re driving by the house to see it and show friends and family … you’re excited, and you should be!

Now the seller has signed the offer, and it’s ratified. You’re buying a house! You’re over the moon!

And then you start to receive emails and calls from your lender, asking you for this document/that document and more. You’re not so excited any longer.

Buying a house is exciting, and while the process of getting a mortgage can be tedious, it’s not as bad as we make it out to be.

Thanks to Kim Burke – an amazing lender, by the way, if you’re getting a mortgage OR refinancing – here’s a quick cheat sheet on some of the things you’ll need to have ready in order to get that mortgage going. Remember … the faster your loan is processed, the faster you move in.

When’s the housewarming party?

Required Documentation for Mortgage

Click here for a link to a PDF of the image.

How To Protect Your Credit Score When Getting A Mortgage

The debt totem poleA client, who’s buying a house and closing next week, was emailing back and forth with me this afternoon. When I told her we were “clear to close”, she said that this seemed like a good thing, and to let her know if it wasn’t. “Clear to close” just means that all conditions of the loan have been approved, and we’re ready to go, so I told her as long as she stayed employed and didn’t buy anything major that would affect her credit score, she was okay.

That’s right – when you’re getting a mortgage, don’t buy things that are going to require credit checks. Don’t go and finance a car to put in that nice two-car garage. Don’t go and drop serious money on that couch and Lazy-Boy you just HAD to have for the man cave. And don’t open a store credit card! Those sorts of things require credit checks, which means your credit gets pinged, which means that your credit score goes down

As I reflected on the conversation, I remembered that Dan Green, of TheMortgageReports.com, had just written about this the other day. From his post (emphasis mine):

You have the right to shop with as many lenders as you like. The trick, though, is to shop for your mortgage within a limited, 14-day time frame. If you can manage that, the credit bureaus will acknowledge your first credit pull as a “ding”, but will ignore each subsequent check.

This means that you can have your credit checked by an unlimited number of lenders within a 2-week period, enabling you to compare mortgage rates and fees ad nauseum.  And, no matter how many credit checks you do, the mortgage inquiries get lumped into a single credit score hit.

You can read the whole post here. Photo from TheMortgageReports.com.

How To Find The Best Mortgage

Interesting graphic from TheMortgageReports.com, and Dan Green. It takes a look at your downpayment amount, your loan size, and your credit score, and walks you through specific questions to help you determine the best program for you. Obviously an infographic can’t determine exactly what you need, but a good lender certainly can – so once you’ve walked through the information, contact Dan and let’s get started.

Already pre-approved? Start your search for a new home here.

How To Buy A Home : Infographic from The Mortgage Reports

Check local mortgage loan limits at The Mortgage Reports.

How To Buy A Home

You’re buying a home. Maybe it’s your first, maybe it’s your second, maybe it’s your tenth. Regardless, the process is almost always the same – but what, really, does the whole thing look like?

It’s different for everyone, of course, but one of the biggest hurdles in every transaction is getting the mortgage loan. Dan Green of TheMortgageReports.com put together this awesome infographic on the financing side of buying a home, including 5 Popular Sources To Find A Mortgage, Affordability, and Closing Costs. Check it out.

How To Buy A Home : Infographic from The Mortgage Reports

Homebuyer assistance via The Mortgage Reports.

Want to start searching for your next home? 

The Paperwork You Need To Apply For a Mortgage

getting a mortgageYou’re getting a mortgage … what kind of paperwork do you need?

The answer?  A lot.  But not as much as you might think, and it’s somewhat dependent upon (1) the lender you’re using, (2) the type of loan you’re getting, and (3) some unknown force of the universe.

Getting a mortgage isn’t terribly hard, it’s just tedious.  So when you’re preparing to make a loan application with a lender, it’d be a good idea to have all documentation related to your income, your expenses, and your assets, at hand – ’cause they’ll want to see everything.  Have:

  • at least two years of your tax returns (three or more if you’re self-employed), including all W-2s and 1099s. Two month’s worth of pay stubs, as well.
  • bank statements. The rule of thumb used to be three months worth of bank statements, but I like being prepared – have six months.
That’s it. But be prepared to explain everything – if you have lots of overtime pay, be prepared to explain why, and how much.  If you’re getting large deposits (from the sale of items, like cars, etc.), be prepared to explain where those came from.   And if you’re getting money for a down payment, be sure to talk with your lender before receiving the gift, so that you know you’re receiving and handling the gift appropriately.
There are plenty of hoops to jump through when getting a mortgage, but being prepared will go a long way.  Talk to your lender about what’s going to be needed, as well as what needs to be done before getting the loan so that you’re in the best position possible for the type of loan you want.  Loan contingencies are one of the most common areas we see a deal fall apart … the buyers who take the time to get prepared up front typically have no issues at all.
Typically.

Finally, Homeowners Are Taking It To Big Business

As a homeowner with a mortgage, think you don’t have rights against the bank? Think again – a Florida couple successfully foreclosed on a Bank of America branch, after the bank failed to pay them the court fees they were awarded in a settlement because the bank foreclosed on them.  The video is well worth the six minutes …

It’s easy to think that the consumer doesn’t have any rights against Big Business, but these homeowners proved that in fact that’s incorrect. Long live the little guy!

H/t to Gary Cope for the story. You can find out more at the serious NPR site.

Sorry – Zillow is not accurate in Montgomery County

Much of the conversation with buyers lately has centered around what the market is going to do.  It seems everyone wants to know two things – (1) what’s the market going to do, and (2) when are rates going up?  At the risk of sounding flippant (and failing miserably, I’m sure), my response is usually “who cares?“. I mean, if you’re a serious buyer and the right house is on the market, in your price range, you buy it – right?  And with rates ranging somewhere between 3.87% and 4.63%, is 1/8th of a point going to make that much of a difference?  When you’re ready to buy, you buy – there’s no sense trying to time or “game” the market.

Dan Green, of The Mortgage Reports, decided to take it a step further today when he posted that a 1% change in mortgage rates means a significant change in what you can afford – proof that waiting and trying to time the market really can have a negative on what a person can afford.  It’s worth a read … and take this away:

Purchase price has less to do with home affordability than you think.

The real key to home affordability is mortgage rates.

Check out the chart – a 1% change in mortgage rates means a change of 10.75% in home affordability.  That’s significant.  While his purchase price numbers might be a little high for our area, the math still applies.  Let’s assume a sale price of $300000 – instead of a buyer being able to afford a $300000 home in Blacksburg, by waiting for that “perfect buy” they allow their purchasing power to fall by nearly 11%, resulting in being able to afford something for $267000.

Before you say “oh how said, they can still afford something for $267000”, don’t be fooled.  The numbers work across the board – by waiting and watching prices, trying to time the market and get the best deal on the market at its lowest point, and failing to watch mortgage reports, you ignore the one thing that applies to every mortgage loan in the market … rates.

Nice post, Dan, and thanks for doing the math.  If you’d like to get your own mortgage rate quote online, check out this link.

Mortgage Terms Made Simple

Understanding your mortgage shouldn’t be a draconian task (that’s a nod to Michael Pierce).  In fact, it should be ridiculously easy.  And it should never be as complicated as this.

So kudos to Continuum, then, for coming up with a Mortgage Disclosure Form that shows – in simple terms – the terms of a mortgage.

Simple, easy to understand language and visual. Short and to the point.  I like it.  Will it became a standard?  Who knows.  But it’s one step toward solving a larger problem.  And that’s a good thing.

H/t to FastCoDesign.com for the article, and Nest Realty Group for sharing it.

 

How Often Do Mortgage Rates Change?

From Dan Green and TheMortgageReports.com:

Mortgage Rates Are “Good” For Less Than 4 Hours

In February, lenders issued 2.45 rate sheets per day. This means that mortgage rates changed every 3 hours, 16 minutes on average last month.

It also means that the rate quote you picked up by email yesterday isn’t worth the pixels it’s printed on today. More than 3 hours have passed and your quote has since expired; it’s a relic of some other day’s mortgage market conditions.

In a market that moves this fast, you not only lose the ability to “sleep on it” with respect to mortgage rate quotes, you also lose the ability to “think on it”.

The Internet has created an informational surplus, but some things aren’t well-suited for exhaustive research – like loans.  That’s why working with an expert lender first, before you even start the home shopping process, to determine your loan parameters will help the process go much more smoothly.  A quoted rate is nice, but if you can’t pull the trigger because your ducks aren’t in a row, then you’re gonna miss your shot.

Photo from bschmove.

From Inman.com – The Anatomy of a Real Estate Appraisal

This article is cut and pasted from Inman.com, with a link to the full article here.  I didn’t want it disappearing behind their pay wall.  Every area is a little bit different, but this is a good, comprehensive look at the mechanics of a home appraisal.  You can find New River Valley real estate tax rates here.

Q: I know that the city appraises a house for tax purposes. Is this the same method that banks use to appraise homes also?

A: There’s a lot of confusion about the value estimates that cities generate for homes, so this is a very astute question. A city’s process of estimating the value of a home for purposes of calculating property taxes is usually called a tax assessment, though some cities do call it appraisal. We’ll use assessment for clarity’s sake to denote a city’s value estimation.

In most areas, property taxes are calculated on an ad valorem, or “according to value,” basis.

For example, in a place with a 1.25 percent state property tax, each county tax assessor has the job of assessing the value of each home, then imposing a tax of 1.25 percent of each home’s value every year, plus local or neighborhood assessments, minus any discounts or exemptions applicable.

Very generally speaking, both cities and mortgage lender appraisers consider the recent sales of comparable homes within a nearby radius of a home as the basis for their opinions of that home’s value. But that is a massive oversimplification, both of the assessment/appraisal method, and of the similarities between how assessors and appraisers operate.

For purposes of this post, let’s assume we’re discussing bank appraisers’ methods when they are appraising a home for purchase, not giving a bank an estimate of a home’s value for purposes of a loan modification, short sale, or to set the list price of a foreclosure.

Appraisers are paid to ensure that the bank could currently resell that home for the price the buyer and seller have agreed to. As such, appraisers work from the purchase contract and its agreed-upon sales price and any seller concessions to repairs or closing costs.

With that information, and other data about whether the sale was distressed at all (e.g., foreclosure or short sale), the appraiser looks primarily at multiple listing service data about homes with very similar numbers of bedrooms, bathrooms and square feet that have sold within a half-mile radius, and within the last few weeks. Appraisers will expand the radius and the time frame of the search if they can’t find at least three to five comparables homes (“comps”) to use.

Next, the appraiser visits the site of the home, usually taking both interior and exterior photos, assessing things like the general condition of the home (so as to compare it against the norm for the area), and also checking for any safety hazards that the bank should require be repaired prior to close of escrow (e.g., broken windows, exposed electrical wires, massive wood rot or unsteady decks).

Then the appraiser goes back to the office and does a property-by-property comparison of the “subject” property against the individual comparables, adding or deducting dollars from her opinion of the home’s value accordingly when the home is more or less valuable than the comparable, for any reason, like this comparable is newer than the subject property, or that comparable isn’t in as good a level of repair as the subject home.

On the other hand, there are generally only a few times a home is assessed for property tax purposes. Most often, homes are reassessed when they change hands — i.e., when they are sold. And they are generally assessed by default to the value that was paid for them, when they are sold between strangers on the open market, so there’s no analysis of comparable sales or site visit that goes on in those cases. The fair market value is assumed to be what a qualified buyer is willing to pay for the home, as shown by what the buyer did in fact pay for the home.

In some states, the assessed values were assumed to rise every year, up to a certain maximum — for example, in California, assessed values rise up to 2 percent automatically — until the market crashed. Now, county assessors in almost every state are adjusting assessed values annually on the basis of comparable sales, as reported by the county sales records.

In a few areas, homes are actually subjected to a drive-by site visit from the tax assessor every three or four years, mostly to check the condition of the home so they can more precisely compare it to the homes that were recently sold.

There are really only two other common occasions for a home to be reassessed by a city. First, when a homeowner feels that their home’s assessed value (and, thus, property taxes) is too high, they can petition for reassessment due to declining market values and, you guessed it, offer recent comparable sales supporting the lower value they feel the home has on the current market.

Lastly, when a homeowner obtains construction permits and improves his or her home, the home is often reassessed upwards to account for the increased value after the upgrades or remodeling. In these cases, comps are not the primary driver of value; rather, the assessor assigns a value to the additional square feet or amenities added.

Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.