For years, everyone that has ever thought about purchasing or refinancing a home has had this question and gone to great lengths to avoid the “monster” called mortgage insurance, or, sometimes referred to as PMI (private mortgage insurance). However, in today’s housing market where we have all experienced declining home values, mortgage insurance has become commonplace and necessary to allow homeowners and potential homeowners to obtain financing for a new home or refinance their existing loan with the very low interest rates that are being currently offered. Mortgage insurance is a default insurance for the lender, and unfortunately, the lender passes this charge on to the homeowner. Standard lending guidelines dictate that a lender’s maximum exposure in any loan cannot be more than 80%. With mortgage insurance placed on the loan, the lender is protected and thus, is willing to lend as much as 100% of the market value or purchase price of the home…
So you’re ready to take the plunge? The All American Dream of homeownership! Wait! How do you know how much home to look for, if you don’t quite know what you can afford? This is a common concern that reflects you’re using the smart approach in reviewing this investment so that you don’t get over your head in financial obligations.
When applying for a new home loan, your loan officer will need to verify your assets, and more specifically, your liquid assets. The lender needs to verify assets to make sure you have enough money to cover the cash required at closing which includes down payment, closing costs, and prepaid items; as well as the total reserves required for underwriting approval.
Types of Allowable Assets:
• Checking and Savings Accounts
• Earnest Money
• IRA/401(k)/retirement accounts
• Gift Funds
• Selling non-liquid assets
Guidelines for loan programs that require asset verification require that the lender source and/or season the assets. Sourcing assets means that you can verify for the lender where all of the funds came from. Seasoning assets means that the lender can verify that they have been in the account for at least two months….
Why is the APR on my Truth-in-Lending disclosure higher than the note rate?
The difference between the annual percentage rate (APR) and the note rate is very confusing especially for first time home buyers. Actually, even seasoned buyers have difficulty understanding the difference between the two numbers.
The interest rate is the rate a lender charges a borrower for use of money for a specific length of time. The interest rate, loan amount, and loan term determine your monthly payment. The APR does not affect your monthly payment….
The Mortgage Industry has changed over the last several years regarding various loan program down payment requirements.
There are 4 basic loan programs. Each has its own unique down payment requirement.
They are as follows:
VA is a 100% loan for Veterans and do not have a down payment.
Rural Development is a 100% loan to qualified buyers.
FHA requires a 3.5% down payment.
Conventional requires a 5% down payment.
Many borrowers worry about not having the funds to purchase a home. Don’t give up on your dream home without knowing all of the down payment assistance options available to you whether you are a first time homebuyer or buying your fifth home!
Did you know that the most important factor in choosing the right loan is NOT always the interest rate ??
Many customers that I speak to concentrate heavily on getting the lowest interest rate possible in the market today, and completely ignore what they are actually paying to get that rate. We all want the lowest rate possible, but you must always factor in the closing costs you are having to pay or finance in the loan to tell if this lower rate is the best option for you.
2 most important questions to ask yourself:...
Hi, I’m Lori Clark, the Branch Manger and a Sr. Loan Officer with Guaranty Trust Co. Since this is my first blog post, I think a good place to start is to address first time homebuyers. I get calls every day from buyers with questions about the mortgage process or even looking for a local realtor. Don’t feel overwhelmed by all of the scary stories others may have shared about their mortgage process- your loan options are unique to you! I can assure you that when you work with someone that is knowledgeable about the programs that are available to first time homebuyers you will have a smooth closing!
Congratulations!….You’ve decided you’re ready to buy a home, and you’ve heard horror stories about CREDIT- nightmares that you’d rather avoid. Well, the first step to being at peace with your credit is to understand it.
What is a Mortgage?
There are many different definitions for a mortgage. But to put is in simple terms, a mortgage is a loan that is secured by a property or house and paid in installments over a set period of time. The mortgage is your promise to the lender that the money borrowed will be repaid.
What are the Components of a Mortgage?