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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

Is My Credit Good Enough to Buy a Home?

Is My Credit Good Enough to Buy a Home?

Achieving a high credit score should always be something to aim for. When it comes to buying a home, the higher your score is, the easier it will be to attain a loan since it shows the likelihood of you paying back your debt to the mortgage lender. Potential homebuyers should strive for a credit score of at least 760 in order to attain the best rates. However, it is still possible to purchase a home with a slightly lower score, although you will likely face higher rates. If your credit falls on the lower end of the spectrum here are a few ways to improve your score.

  • Review your credit report: once per year you are entitled to a free copy of your credit report. By obtaining your report you can check to see if there are any errors that have impacted your score.
  • Pay down maxed credit cards first: This will help alleviate your credit utilization rate by paying down the cards who have or almost reached their credit limit
  • Become an authorized user: Being added as an authorized user on a friend’s or family member’s credit card will help you to build credit with the help of someone else.
  • Don’t apply for new credit lines: This can hurt your credit score significantly especially if you were recently denied opening a new account.

Depending on which type of home loan you are applying for, the minimum credit score can vary with some being as low as 500. When purchasing a home, find out how much you can get pre-qualified for based on your current credit score.

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Mortgage News Matters

Tips on Navigating a Short Sale for Buyers

Are you a buyer considering purchasing your next home through a short sale? Consider our 5 helpful tips for buyers navigating a short sale.

  1. Get an inspection. Even though the property in a short sale is sold “as-is” it is important to get an inspection before going to the closing table. This will help you determine how much work you can expect to put into the home, as well as its real value. In some cases, proving that the home is in much worse condition than it seems, can persuade the lender to accept a lower price.

  2. Make a realistic offer. It is important to do your homework before putting in an offer. Though buyers can expect to get a deal when purchasing a home through a short sale, they will still need to be willing to make a reasonable offer. If the offer comes in too low, it is likely the lender will move on to another buyer.

  3. Provide a large down payment. Lenders are looking to liquidate short sale properties as soon as possible to make back their money invested. By offering more cash up front in the form of a down payment, buyers are more likely to get their offer accepted.

  4. Offer to pay for the seller’s closing costs. Though it is typical for the lender to pay commission and other seller fees, by offering to pay these costs the buyer can gain a competitive advantage to others also placing an offer.

  5. Hire a real estate professional. Short sales are a more complex process than that of a typical home sale. Hiring a knowledgeable real estate professional with experience in such complicated transactions can give buyers a leg-up and help them better navigate the process.

For more helpful tips on how to navigate a short sale, contact a VanDyk Loan Originator today!