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Mortgage News Matters

8 Reasons that Could Delay Closing on a New Home

man and woman holding keys to new home

At VanDyk Mortgage, we are determined to provide you with a seamless and efficient experience, from the moment you apply for your loan until you close on your new home.

Though we work tirelessly to make sure you close on time, want wanted to share some common reasons that could cause a delay.

  1. Pest Inspection. Ideally, these issues are resolved before escrow closes, but sometimes there are issues and further action may need to be taken by either the buyer or the seller.
  2. Low Appraisal. In the case of a lower-than-expected appraisal, the seller may have to lower the selling price, or the buyer will have to pay the difference in cash. In this case, we always think it is a good idea to get a second opinion before moving forward.
  3. Claims to the Title. Title insurance protects both the buyer and lender against claims on the property. If there is in fact a lien or a claim, this will have to be resolved before the transaction can move forward. By simply performing a title search, you can ensure that no party – including the IRS, state, or relative of the seller – has any legal claim to the property.
  4. Home Inspection Defects. Most individuals sign a home inspection contingency, which allows the purchaser to back out of a deal without penalty in the case that there is a major defect in the home inspection. If a contingency is not put in place, the purchaser could lose the entirety of their earnest money down. If the sale proceeds, there may be a delay due to the time it took to go through negotiations.
  5. Buyer or Seller Doubt. Having cold feet is very real, and something that can certainly delay the closing of a new home. Unless there is a legitimate reason to back out of the purchase, i.e., not waiving a contingency or a deadline not being met, the buyer will be at risk of losing their earnest money, should they decide not to go through with the sale.

    This money is used to compensate the seller for the time that the property was taken off the market, missing out on other possible offers. Likewise, in the case of a seller having cold feet, the buyer is eligible for damages from the seller.
  6. Financing Falls Through. It is best practice to get pre-approved, at the very beginning of your homebuying journey, in order to secure the best mortgage loan program for you. However, there are cases, such as a drastic increase in interest rates, a change or loss in employment, or a decrease in credit score, when financing falls through. If this happens, the homebuying process can be delayed or even stopped altogether.
  7. High-Risk Location. In some locations, homes may require Hazard Insurance. To determine if you will need this type of insurance for your new home, you can request a National Hazard Disclosure Report, and see if any national hazards in the area could affect you.

    Hazard Insurance is often greater than homeowner’s insurance and can cause a delay in the closing process. To avoid this, you can ask your agent or city planner about national hazards in your area.
  8. Survey Issue. Before closing on your home, a qualified land surveyor will draw up the boundary lines for your property. In the case of an infringement, either by a neighboring tree or fence, you may have to hire an attorney to facilitate a lot-line agreement.
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Mortgage News Matters

How to Apply for a Mortgage: The Loan Process

real estate agent smiling on the phone looking at paperwork

Navigating the steps of the loan process can feel complex – especially if it’s your first time doing so.

To help you out, we’ve put together a helpful list that breaks down the process, step-by-step, so you can focus your efforts on preparing to move into your new home, rather than worrying about how you’re going to get there.

  1. Pre-Approval. The first stage in the mortgage loan process is to apply for a pre-approval. Getting pre-approved is a more in-depth process than getting pre-qualified and will require more paperwork from you. The upside? It shows the seller that you are serious. This information will tell the seller that you can secure a mortgage and you are ready to find your new home. Once you receive your pre-approval letter, it will be valid for 90 days. For more information on pre-approval, refer to our Pre-Approval Document Checklist.
  2. Submit an application. After you’ve received pre-approval, you’re ready to submit your application! At VanDyk Mortgage, there are 3 ways you can apply; either online, over the phone, or in person. Some documentation, such as a government-issued photo ID, home address, and income, are required at this stage. For a full list of required documentation, please refer to our Application Checklist in our helpful Loan Survival Guide.
  3. Loan Submission. Once your offer is accepted, your loan package will be sent to you for the required signatures. At this time, all documentation is sent to underwriting for approval.
  4. Conditional Approval. At this stage, underwriting has reviewed, and your loan is conditionally approved contingent on the receipt of additional documentation.
  5. Final Approval. A loan processor will review the materials for completeness and send them back to underwriting for final approval. At this stage, your loan officer will begin to prepare you for the closing process.
  6. Closing. A title company or closing attorney prepares documents that are reviewed and signed by you. And… voila! You’ve just become a homeowner! Congratulations and welcome to your new home! See, it wasn’t that hard!

To get you started on your Mortgage Loan Process, reach out to one of our experienced Loan Originators today!

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Mortgage News Matters

Costs to Consider When Purchasing a New Home

miniature house with coins stacked in front

It is important to keep in mind that the total cost of your new home, includes more than just the sale price.

Unexcepted costs, from insurance to move-in expense, can leave the homebuyer in both financial and emotional distress and take away from the excitement of their new home purchase – if they don’t plan for them.

To avoid such concern, we’ve created a list of some unexpected costs that could come with purchasing a new home.

  • Down payment. Your down payment is typically the first expense a homebuyer will begin to save towards. Down payments vary depending on what type of mortgage you choose. To help you better determine which loan program is right for you, visit our Loan Options page on our website. Once you have chosen the right loan program for you, you can start saving towards your down payment.
  • Closing costs. These costs, which begin to accrue as soon as you start the home buying journey, can often be overlooked. But that does not mean that they shouldn’t be budgeted for. These costs can include, but are not limited to; your application fee, origination and/or underwriting fees, title insurance, title search fee, and in some cases a transfer tax.
  • Move-in expenses. From hiring a moving truck to purchasing cleaning supplies, moving expenses are inevitable and should always be considered in the total cost of your new home.
  • Insurance. Homeowners can be eligible for two different types of insurance programs:
  1. Homeowner’s insurance. This type of insurance protects you from unexpected damages to your home, such as effects from a natural disaster, theft, or vandalism, to name a few. Though this insurance is not required by law, it is highly recommended and can be required for some lenders.
  2. Private Mortgage Insurance. PMI or private mortgage insurance is required when a homebuyer puts less than 20% towards their down payment. This insurance provides protection for the lenders if the buyer defaults on their loan. It’s helpful to note that this insurance does not last the lifetime of the loan and is eventually eliminated as the buyer pays down their mortgage.
  • Property Taxes. These taxes, which are often included in your monthly mortgage payments, vary in geographic location. Property taxes are a variable cost and are not always based on the initial price you paid for your home. Meaning, they change over time, as the value of your home changes. Some possible reasons for an increase in property taxes would be a home improvement to you or a neighbor’s home or the development of a new school nearby.
  • HOA. HOA, or homeowner’s association fees, are applicable when buying a home or condo in a community that is run by a homeowner’s association. These fees are used towards services provided by the association such as security, maintenance, landscaping, and amenities like a pool or a gym. These costs vary from place to place.
  • Home maintenance, repairs, and utilities. Having a fund available for things like maintenance, repairs and your new utility bill is always a good idea when purchasing a new home. Some experts suggest saving 1% of the home’s value as an emergency maintenance fund in the case that these almost certain expenses arise.
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Mortgage News Matters

How to Start Saving for a Downpayment

child holding a piggy bank

So, you’ve decided to purchase a home? Congratulations! As one of the largest financial purchases you may make in your lifetime, it is important to be aware of and start saving for your new home as soon as possible – starting with your downpayment.

The best way to begin is to create a plan of action that reasonably fits within your current lifestyle. Every homebuyer’s situation is unique to them. That is why we’ve included a range of techniques for saving towards your big purchase.

  1. Create a goal. The first step in any money-saving plan is to create a goal. To determine this, it is helpful to first decide which mortgage loan program is right for you. See our full list of Mortgage Loan Programs and the down-payment amount required for each. Once you know this information, you can start to work towards your goal.
  2. Implement money-saving techniques. Saving towards any large monetary goal doesn’t happen overnight. To help you start working towards your savings, we’ve listed a few techniques that can help get you on your way:
    • Set up an automatic transfer to a savings account. This can be done through most banks, making saving virtually effortless.
    • Save tax refunds. Tax refunds are another helpful bonus you can add to your down payment fund.
    • Save unexpected income such as bonuses or raises. Though it may be tempting to spend this unexpected income right away, think of it as a bonus you can add to your ever-growing house fund.
    • Apply for a credit card with cash rewards. If you’re going to apply for a credit card, it can be helpful to make sure you go for one that gives you cash rewards. This way, you can save this cash towards your home.
    • Don’t take on any new unnecessary expenses, such as a new car payment or car lease. Try to eliminate expenses that you can.
  3. Take advantage of first-time homebuyer programs. These are state-specific so make sure you know what is available to you based on your geographic location. For a comprehensive list of first-time homebuyer programs in each state, check out this article by Nerdwallet.com.
  4. Put your money in a high-yield savings or money market account. These accounts can accumulate interest while remaining liquid enough to be accessed at any time.

    You can also open a CD, or certificate of deposit. This allows you to accumulate more savings than a high-yield or money market account.

    Keep in mind, the money you put into a CD is inaccessible to you for a period of time and has a penalty to open. This is a good way to save money that you do not see yourself needing in the near future.