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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

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!

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Mortgage News Matters

Process for Buyers Purchasing a Short Sale

Because a lender is much more involved in the purchase of a short sale, it is important to recognize that the process is not as simple as the typical home buying process between a seller and a buyer.

To help, we’ve broken it down into 6 unique steps that buyers must take when purchasing a short sale.

Step 1: Get approval for financing.

Like with a typical home purchase, the buyer must first get approved by the lender to take out a mortgage loan. This is especially important during the process of a short sale, as the lender will need to be sure that the new buyer is financially sound enough to make their mortgage payments – to avoid a future similar situation.

Step 2: Work with a real estate agent to find a home.

If you are committed to purchasing a short sale, it is important to find a real estate agent who can help you navigate the process. If you choose to find a home without the help of a real estate professional, you may want to focus your energy on looking at homes that are listed as ‘pre-foreclosure properties’ or searching through public records.

Step 3: Research, research, and research some more.

Before making an offer, it is vital to research said home and gain as much insight into the property’s history, as well as its current market value. Since, with a short sale, the seller owes more than the home’s actual value, you will want to find exactly how much the seller owes the lender.

You will also need to find out if there are any claims on the property by an outside person or entity, like a lien. The best way to be sure of this is to hire a title company to run a title search on the home.

This is another perk to hiring a real estate agent to help you, as they have exclusive access to important tools that can help you find this information.

Step 4: Make an offer.

Though many buyers look to short sales as a way to purchase a home for an especially good deal, it is important to keep in mind that the lender is still trying to make back the money on their initial investment. This is why it is important to get a realistic understanding of how much the home is worth before putting in an offer. You can do this by looking at what other homes in the area have sold or are currently priced at. Your offer will still have to be close to the market value if you want a chance that it is accepted.

Step 5: Get a home inspection.

Because of the nature of a short sale, they are sold “as-is.” This means buyers are not able to negotiate for a lower price if they discover problems with the property. Even with this, it is always a good idea to get a home inspection before purchasing a property, to get an understanding of any defects or issues with the home. If repairs are needed, this knowledge will help prepare the buyer.

Step 6: Close on the property.  

For a short sale to close the seller must provide documentation of the following:

  • Hardship letter, explaining that the seller is in financial distress and unable to make their mortgage payments
  • Proof of income and assets, which shows 2 years’ worth of bank statements and tax documents as proof that the seller is not financially equipped enough to pay back their debt.
  • Up-to-date list of liens, showing proof that there are no other individuals who can make a claim on the property.
  • Comparative market analysis, which shows the lender a list of comparable properties currently for sale and have sold within the last 6 months.

Though they are not necessarily an ideal situation for sellers to find themselves in, short sales can be beneficial to buyers and sellers alike.

To learn more about the process of purchasing a short sale, contact a VanDyk Loan Originator today!