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Mortgage News Matters

How to Choose the Best Mortgage for You

Any homebuyer will tell you that choosing the perfect mortgage is just as important as choosing the perfect home. For many, buying a home with cash is not possible, which is why finding the right mortgage loan program is essential. When choosing the right mortgage for you, it is important to find one that works with your unique budget, as it is an expense that you will be paying off over the course of many years.

To better help you on your home buying journey, we’ve compiled a list of 5 guidelines to follow when choosing the right mortgage for you.

  1. Determine how much you can afford. Your mortgage is made up of two main costs. These are (1) the loan principal and (2) the interest. The principal is the loan amount you are applying for. The interest is the additional amount tacked onto your monthly payments, as a fee for borrowing money from your lender. Your monthly payments are paid through an amortization schedule set by your lender. For more information on determining how much of a mortgage you can afford, take advantage of our free Mortgage Calculator offered on our website.
  2. Set a goal and start a savings plan. We’ve said it before and we’ll say it again, buying a home is one of the biggest financial decisions one can make in one’s lifetime. There are many costs to consider outside of the initial sale price listed on the For Sale sign. Costs like down payment, closing costs, and insurance to name a few. It is important to acknowledge each of these commonly overlooked costs before purchasing a home and setting a goal to achieve them. For a comprehensive list of these costs, refer to our post on Costs to Consider.

    In addition, you’ll want to start a savings plan that can act as a step-by-step guide to reaching your savings goals. For helpful tips on saving towards your home buying goal, refer to our blog on How to Start Saving for a Down Payment.
  3. Consider different types of mortgage loan programs. Since each homebuyer has needs and wants that are unique to them, there are a variety of mortgage loan programs to choose from. At VanDyk Mortgage, we specialize in 15- and 30-year Conventional loans, FHA loans, USDA, VA, and Adjustable Rate Mortgage loans.

    Each loan program has different requirements and qualifications that must be met by borrowers. For an extensive list of each loan program and its specific qualifications, refer to our Mortgage Loan Options on our website.
  4. Understand how much insurance you will be required to pay. The cost of mortgage insurance varies depending on which type of mortgage loan you end up choosing. For some loans, insurance is required, while for others, it comes in the form of an upfront funding fee.

    Your insurance premium is based on different factors, such as the amount of money you can put towards your down payment or your own unique credit score. For more information on mortgage insurance and how much it could cost you, refer to our post What is Mortgage Insurance?
  5. What type of loan do you qualify for? One of the most important questions you can ask yourself when choosing the right mortgage loan for you, is ‘What type of loan do I qualify for?’ You can be as determined as you’d like to save towards your goal for the perfect home, but if you don’t qualify, your efforts may be in vain.

    The best way to determine this is to talk with an experienced Loan Originator as soon as you are ready to start looking for your new home. They can go over all of your loan options, what types you qualify for and how to start saving towards your goal. To reach out to one of our experienced Loan Originators, contact us today!
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Mortgage News Matters

How Much is Your Home Worth?

Understanding how much your home is worth is extremely valuable information for any homeowner. It can help you to better make decisions when pricing to sell or deciding whether or not to refinance. Though some may assume you need to seek professional guidance, there are many steps you can take on your own before doing so.

To help you take these steps and determine the value of your home, we’ve put together 5 useful tools that can give you all the information you need!

  1. Use automated valuation model or AVM. An automated value model is a tool that helps determine the value of your property by looking at public records, such as local market information, price trends, and tax assessments. Leading AVM providers, such as FreddieMac, Equifax, and VeroValue can deliver this information extremely quickly and can be a major reason many homeowners choose to utilize their services.

    Keep in mind that these results are mostly accurate, however, they do not account for the property’s current condition and can be slightly off. If you’re considering using the AVM, it is important to talk with a real estate expert for more information.
  2. Get a CMA, competitive market analysis. Though not as accurate as getting an appraisal, a competitive market analysis is a great way to get a good estimation of your home’s value. Homeowners can perform their own market analysis by researching comparable properties in their area or areas like theirs. Homeowners can also receive this information easily through a real estate agent.
  3. Use the FHFA House Price Index Calculator. The FHFA House Price Index Calculator projects the value of a home in today’s market that was purchased at a specific time, based on the average appreciation of homes in the area.

    It is important to keep in mind other factors that will affect the actual value of the home, like its condition or whether major renovations need to be made, just to name a few. The calculator just provides a projection of the home’s value.
  4. Get an appraisal. One of the best ways to determine the value of your home is to get an appraisal. One thing that many homeowners might not realize is that you don’t have to be associated with a lender before ordering an appraisal on your home – you can get one at any time. Professional appraisers evaluate the market, your property, and comparable properties to create an official report.
  5. Look at comps in your neighborhood. Comps are comparable properties for houses in similar markets to yours. Homes are compared by certain factors, such as size, location, conditions, and upgrades.

    Keep in mind that you may have to adjust your findings when it comes to the major differences in homes, such as the number of bedrooms or renovations that have been made. Experts suggest finding at least three valid comps to most accurately determine your home’s market value.
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Mortgage News Matters

8 Reasons that Could Delay Closing on a 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

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!