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Mortgage News Matters

Costs to Consider When Purchasing a New Home

When purchasing a home, it is important to keep in mind that the total cost includes more than just the original sale price. Planning for these unexpected costs is the best way to ensure a seamless home-buying experience. So, what are they?

Down Payment

A down payment is the cash you pay upfront when purchasing a home. This is your contribution toward the purchase and represents your initial ownership stake in the home. The required amount will vary by mortgage type.

Closing Costs

Closing costs are expenses, above the property’s price that are incurred at the closing of a real estate transaction. These costs can include application fees, origination and/or underwriting fees, title insurance, title search fee, and in some cases a transfer tax.

Insurance

There are two types of insurance to consider when purchasing a new home:

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.

Private Mortgage Insurance

PMI provides protection for the lenders if the buyer defaults on their loan and is required when a homebuyer puts down less than 20% of their down payment. For FHA loans, insurance is required regardless of the amount of the down payment.

H.O.A.

Homeowner’s Association fees are applicable when buying a home or condo in a community that is run by a homeowner’s association. They are used for services and amenities like security, landscaping, and recreation centers.  

Property Taxes

Property taxes are used to fund services like education, transportation, and community parks. They vary by geographic location and can increase along with the value of your home.

Move-In Expenses

Often overlooked, moving expenses are necessary to any home-buying experience. Some of these include hiring a moving truck or purchasing cleaning supplies.

Maintenance, Repairs, 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 when these almost certain expenses arise.

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Mortgage News Matters

Declined for a Mortgage? You Could Still be Eligible for Homebuyer Assistance

According to an analysis done by Down Payment Resource, there has been an overwhelming amount of mortgage loan applications declined. It was determined that it was due to either insufficient cash-to-close or disqualifying debt-to-income ratios. These declined loan applications represent $3.7 billion in volume furnished by mortgage lenders. Most of these denied applications would have been eligible for homebuyer assistance if they had applied.

Report Findings:

A significant portion of denied loan files were eligible for assistance programs.

  • This large portion of loans that were potentially recoverable with homebuyer assistance at the time of denial demonstrates an extremely low-cost opportunity for lenders to have increased their purchase volume.

Denied applicants were found to have been eligible for multiple programs.

  • Findings reported that declined applications were eligible for an average of 10 homebuyer assistance programs.

 Declined loans had the potential for recovery with homebuyer assistance.

  • Applying homebuyer assistance to a denied loan application on average would have reduced loan-to-value by almost 6%. This would have recovered the application and welcomed more opportunities to achieve a more affordable mortgage with different financing options, lower insurance, and interest rates.
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Mortgage News Matters

What Do I Need to Apply For A Mortgage?

In order to apply for a mortgage, you will need to have a few important documents on hand for your VanDyk Mortgage Loan Originator. This will help verify your employment history, creditworthiness, and overall financial situation. This will also ensure that you can easily make your payments and that you meet all the underwriting guidelines.  

The first step in applying for a mortgage is to submit a Uniform Residential Loan Application. This is something that each borrower must do to simply tell a lender about you.  Following that application, you will be asked to provide documents that support your application. Below is a list of some of the items you are going to need.  

Proof of Income. 

One of the first things you should gather is your tax return. This will allow lenders to make sure that your annual income is consistent with your reported earnings. Our VanDyk Loan Originators will also want to see your pay stubs. Although your tax return shows your annual earnings, your pay stubs will represent your current earnings and will help to confirm that you can pay back the amount that you want to borrow.  

Bank Statements and Assets. 

Next, you will want to provide bank statements for all financial accounts, including investments. This is to ensure you will have the funds to cover your down payment, and closing costs, and maintain cash reserves if it is required. When assessing your risk profile, our Loan Originators may want to look at your bank statements and other assets such as your investments and insurance. These documents can be requested so that our Loan Originators can ensure that you have several months of reserves to make payments in case of an emergency. 

Credit Report. 

Your credit history will be checked by your Loan Originator with your permission when applying for a mortgage as it is a big part of the process. Minor hiccups won’t prevent you from becoming a homeowner, however, an accumulation of late payments, collections, or any other derogatory marks on your credit report will prompt a lender to ask for an explanation. The better your credit score, the lower your interest rate will be.  

Alimony or Child Support Documents. 

If you are someone who relies on this type of income, then you must show proof that you will continue to receive additional payments for at least 3 years. 

Self-Employment 

 If you are self-employed, generally most Loan Originators will require you to have at least a steady 2 years in the same industry. Ways to prove this can be by providing client contracts or providing your business license or proof of insurance.  

The list of documents that are required may vary based on the type of mortgage you are applying for, and your current financial status. These are just the initial documents that you will need, and additional information might be requested once the underwriter has reviewed everything. Ask your VanDyk lender for a list of paperwork you might need to provide and start collecting prior to beginning your application process. Gathering these documents can take some time but by remaining organized and staying ahead can help you get to the closing table faster.  

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Mortgage News Matters

Six Tips to Help You Get The Home You Want

With a soaring demand for homes in the US and little to choose from, forming an offer that will stand out can be the reason you secure your dream home. Here is a list of pro tips that can help you beat the competition this year.

  1. Show them you are financially ready.

In today’s market, you will likely need to make an offer that exceeds the asking price to get the home that you want. Even just a few thousand dollars extra can be the reason for winning or losing out on a home. Your real estate agent will likely be able to give you a good estimate of how much you will need to go over the asking price, however, sometimes you will naturally have a good idea.

2. Put yourself in the seller’s shoes.

A seller will usually be reviewing and comparing the multiple offers that are on the table. You will want to position your offer to stand out among the rest in any way that you can. They will be looking closely at the offer amounts, length of escrow, and any leaseback periods or contingencies. Place yourself in the mind of the seller and think about what their goals are to get a better idea of how to work with your budget, and turn your offer into the strongest version of itself.

3. Get pre-approved for the specific home that you want to purchase.

With multiple offers, sellers want to make sure that at the end of the day, the sale will go through. A pre-approval letter will show the seller that you are not a risk and give you higher ground to work on. In addition to your pre-approval letter, ask your lender to write you one that is specific to the home you are attempting to purchase.

4. Eliminate any Contingencies.

Sellers want to close as quickly as possible so keeping your contingencies as short as possible will eliminate ways for a buyer to back out of a deal. If you can’t remove a contingency altogether then see how you can shorten its timeline while remaining protected from any risks.

5. Be flexible with timing.

Agree to a closing date that accommodates the seller’s needs. Working your schedule around the sellers is a way to set yourself apart by showing that you value their time.

6. Make it Personal.

It’s not always easy for sellers to part with their homes, so they often will want a buyer that will love it the way they do. Adding any kind of personal touch is likely to be appreciated, and shows them you are serious about sealing the deal. A handwritten letter introducing yourself to explain why you love the home can be an effective method. Sending them flowers and a family photo can help create a personal connection as well.