Home Mortgage Financing

3 Important Pieces of Advice to Avoid a Last Minute Mortgage Denial

So you found the right home to buy, got the offer accepted, made loan application, and the lender approved your loan subject to the home appraisal and re-verification of your employment and financial status just prior to closing.  Congratulations!  You are well on your way to achieving your goal.

You think it's a done deal, right? Well, it's not 'for sure' until the closing takes place. Be aware that from the time you make loan application to the actual closing, lenders have become very cautious about the entire home mortgage loan process. Even when you have a good down payment and good credit, issues arising at the last minute can result in your loan being denied.

We have THREE important pieces of advice to help ensure you don't encounter last-minute problems right before the closing:

How Credit Cards and High Debt Ratios Can Keep You From Buying Your Dream Home

We all love to spend money, right?  That’s what it’s for… to spend!  Clothes, cars, etc.  Why work so hard if you can’t enjoy it?  But there’s peril in this if you’re not careful. 

When it comes to buying a home, there are certain factors lenders look at to determine what kind of “risk” you are to them for paying it back.  Two of these factors are effected by your spending habits.  They are called “Debt Ratios”. 

Banks always look at the worst case scenarios when they consider loaning money to someone, so even though you may think every thing is fine, they are thinking about “what if’s” like . . . What if you lose your job . . . What if you get severely ill and can’t work . . . and other morbid and depressing possibilities . . .

Is An Adjustable Rate Mortage The Right Loan For You?

There are lots of misconceptions surrounding Adjustable Rate Mortgages (ARMs), mostly because they have been thought of as the 'villain' of the housing crash. Although there were lots of ARMs written leading up to the crash, qualifying for an ARM back then, and how they were structured,is a far cry from how ARMs are written today.

In light of rising mortgage rates, more buyers may be looking at the advantages of an ARM and how they can save money.

There are many situations where an Adjustable Rate Mortgage can be the best choice for a home buyer.  Let's take a look at some of those situations:

Closing Costs - What Are All Those Fees?

Buyers have lots of questions about buying a home and obtaining a mortgage.  Here we'll list the most common buyer closing costs, what they are for, and the average amount charged for these services in New Jersey.

Within three days of applying for the loan, your lender should give you closing disclosures so you will know what your APR (annual percentage rate) will be. The closing disclosures show you the closing costs that are included in the amount that makes up the APR. You should carefully assess each item for validity, and ask questions about items you do not understand.

We've also included the 'average' fees (according to BankRate) that are charged by lenders to buyers purchasing a $200,000 home in New Jersey:

The Advantages of Getting a Mortgage Pre-Approval vs Pre-Qualification

If you are planning to purchase a home soon, your first step should be to get Pre-Approved for your mortgage financing. 

A Pre-Approval, as opposed to a Pre-Qualification, means that the loan application has already been taken and that you are approved as a buyer up to a certain price range, so your loan will be subject only to the property meeting the lender's approval guidelines.  

This is more important than ever in our current housing marketplace because of the low inventory of available homes for sale and the likelihood of sellers receiving multiple offers on their homes.

Here's why Pre-Approved buyers have the advantage over those who are not Pre-Approved:

New Loan & Closing Disclosures Required October 3rd

New closing documents will be required for all closings starting October 3rd.  The HUD-1 Settlement Statement, Good Faith Estimate and Truth-in-Lending disclosure forms will be replaced by two new closing forms . . . a Loan Estimate and Closing Disclosure.

The new Loan Estimate form is due to consumers three days after they apply for a loan, while the Closing Disclosure form is due three days prior to closing, giving the consumer more time to review the costs of their mortgage. Borrowers will not have a choice to waive the three-day review period.

The Loan Estimate form shows the loan amount and interest rate, what the borrower’s monthly payment will be, estimated taxes and insurance, and how much cash is required to close.

Getting a Home Loan -- What You Should Ask A Mortgage Lender

When you meet with a mortgage lender, here are 6 questions you should ask to ensure that you understand the process and your options.

1. What mortgage types do you offer?

Different mortgage lenders offer different types of mortgages. Each type of loan may have different down payment requirements, interest rates, and lengths of loans.  Common mortgage types include the following:

Mortgages - Who is Borrowing What? And How Much?

Freddie Mac funded approximately 1 out of every 4 mortgages so far this year . . . over 350,000 of them.  So according to Freddie Mac, this is what the makeup of those loans looked like, on average.

  • 92% were detached homes, and 8% were condominiums
  • 89% were for a primary residence, 7% for investment properties, and 4% for second/vacation homes
  • The average loan size was $157,000
  • The average down payment was 22%
  • The Average FICO score was 751

These are averages, so it's important to note that many borrowers qualified for a mortgage with less than 20% down and/or a lower credit score.  More than 20% of the borrowers put less than 20% down . . . some as low as 5%, and 30% of the loans were made to borrowers with FICO scores between 660 and 739.

Mortgage Interest Rates Increased for the Second Straight Week

Interest rates remained at near record lows in January, but have increased for the second straight week, following a better-than-expected January employment report.

According to the Mortgage Bankers Association, the average interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 3.93 percent from the average of 3.625 percent two weeks ago.

Over the past few years interest rates have bounced back and forth, but have remained near historic lows . . . and a mortgage with an interest rate of under 4% is a real bargain.  

Want more details?  Mortgage apps plunge as rates hit highest level of year - Mortgage interest rates rose to their highest level of the year, and mortgage volume reacted in the opposite direction. [Real Estate CNBC]