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Mortgage News Matters

7 Questions to ask your Lender when Obtaining a Pre-Qualification Letter

Pre-qualification is an essential first step in the home buying process. It determines how much money you can borrow and gives you insight into what your mortgage options are – allowing your lender to better identify your unique needs and goals.

To help you best get prepared, we’ve listed 7 important questions to ask your lender when starting the pre-qualification process.

  1. What is your pre-qualification process? Every lender has a different process. To help you best prepare and save yourself the most time and energy, ask your lender what documentation is required before starting the process.

  2. How long can I expect the process to take? There are many factors that go into the overall timeline, such as processing, underwriting, title search, appraisal, and other verification procedures.

    By asking how long the process will take up front, you can set realistic expectations for yourself. It can also be helpful to ask what factors could delay the home closing, so you can best prepare for any likely hurdles.

  3. Are my taxes and insurance included in the payment? This will determine how much your monthly payments will be, as well as how much money you will need to bring to the closing.

  4. Is there anything that could increase my interest rate or loan payment? If a borrower chooses a fixed interest rate loan, their payment will never increase throughout the life of the loan. However, if taxes and insurance are included, your payment could change over time due to increases in HOI premiums and property taxes.

  5. Can I lock in my interest rate? And if so, how long will my interest rate be locked? Typically, mortgage rates are priced with a 30-day lock, but you can choose to delay this if you are purchasing a foreclosure or short sale. A shorter lock period means a lower interest rate, while a longer lock period results in a higher interest rate.

  6. How will my credit score affect my interest rate? This is an important question to ask, especially if you have had any changes in your recent credit scenario.

  7. How much should I expect to pay at closing? There are many factors that go in to determining your closing costs, such as your earnest money deposit, appraisal fees and seller contributions. By getting this number up front, so you can properly budget for closing day.

To learn more about the pre-qualification process and get the answers to your questions, contact a VanDyk Loan Originator today!

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Mortgage News Matters

What are the Benefits of Paying with Mortgage Points?

We’ve said it before and we’ll say it again, purchasing a home is one of the biggest financial decisions one can make in their lifetime. Those home buyers who could use help with financing may want to consider using mortgage points.

What are Mortgage Points?

Mortgage points, or discount points, are fees paid to the lender at closing to reduce the borrower’s interest rate. Completely optional for homebuyers, paying for discount points can lower the monthly mortgage payments and is often referred to as “buying down the rate.”

How do they work?

Homebuyers buy points from their lender and each point costs 1% of the mortgage amount. For example, one point of a $400,000 mortgage would be $4,000. Each point lowers the rate by 0.25% and homebuyers can buy more than one point or fractions of a point.

What are the Benefits of paying with Mortgage Points?

  • Lowers interest rate for the buyer
  • Lowers monthly mortgage payments

Keep in mind your monthly savings depend on the interest rate, the amount borrowed, and the length of the loan’s term.

To learn more about mortgage points and determine whether they are right for you, contact a VanDyk Loan Originator today!

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Mortgage News Matters

What are the Benefits of Buying a Foreclosed Home?

Buying a foreclosed home can be beneficial to home buyers in a variety of ways. The main one being – it’s attractively low price. With most sold well below market value, foreclosed homes can be a great option for homebuyers looking to spend less!

What is a foreclosed home?

A foreclosed home is a property that has been repossessed by the bank or government after the homeowner stops making payments and defaults on their loan.

Types of foreclosures:

  • Pre-foreclosure
  • Short sale
  • Sheriff’s sale
  • Real estate owned

How to find a foreclosed home?

Potential homebuyers who are looking to purchase a foreclosed home can look to some government-backed websites or simply take a drive throughout different neighborhoods, as they would for any other home. Another option is speaking to a real estate agent who may be more knowledgeable of foreclosures in the buyer’s preferred neighborhood.

What are the benefits of purchasing a foreclosed home?

  • Lower than market value price
  • Lower down payments
  • Lower interest rates
  • Elimination of appraisal fees and some closing costs

A foreclosed home is typically set at a lower than market value price. This is a great option for those homebuyers who are looking to purchase but cannot afford many of the homes on the market. Along with this, foreclosed homes tend to have lower down payments and lower interest rates, making them even more affordable. Lastly, when purchasing a foreclosed home, buyers can eliminate appraisal fees and some closing costs, making the home buying process just that much simpler.

To learn more about foreclosures and the process of buying one, contact a VanDyk Loan Originator today!

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Mortgage News Matters

Is Delayed Financing Right for You?

What is delayed financing?

Delayed financing is when a buyer pays for their home upfront with cash, and then immediately obtains a mortgage after the home is purchased.

What are its advantages?

The biggest advantage of delayed financing is the power of paying cash. A cash offer provides buyers with a competitive edge and allows them to stand out in a seller’s market, much like the one we find ourselves in today.

This method allows the buyer to make an enticing all-cash offer, then immediately puts the money right back into their pockets with a cash-out refinance.

What are the restrictions?

  • The amount of the mortgage loan obtained cannot be greater than the amount of the purchase price, closing costs, prepaid fees, and points, combined.
  • Applicants must have proof of cash purchase.
  • Applicants must provide proof of the initial source of cash used for the purchase of the home.
  • Applicants cannot apply for delayed financing with a home they purchased from someone they have a personal relationship with.
  • If funds are provided from a third party, applicants must provide a gift letter.
  • If applicants were provided a gift fund for the purchase of the home, they cannot give the cash from the cash-out refinance back to the donor.
  • The property must be free from any liens.

To learn more about delayed financing and if it is right for you – contact a VanDyk Loan Originator today!