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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

Costs to Consider When Purchasing a Home.

Buying a home is likely to be the largest purchase you make in your lifetime. Along with the price tag, there are other costs to also consider. Costs will vary from buyer to buyer due to a few different factors including the type and length of the loan you receive, as well as location and demand. It is important to familiarize yourself with these financial obligations prior to beginning your home search. To help with understanding more about what comes along with the purchase of your home, here is a list of costs you will need to consider.

Down payment:

The down payment is a set price you pay upfront when you purchase a home. Through a conventional loan, a down payment is required and will be determined based on the property type and the price of the home. The amount you put down on a home will affect your interest payment as well. The larger the down payment, the lower your interest rate. However, some loans such as a VA loan or USDA don’t always require a down payment.

Closing Costs:

To finalize your mortgage loan and receive the keys to the property, you will have to submit all closing costs. These costs are each directly related to your mortgage and include the following.

  • Application fee
  • Appraisal fee
  • Credit check fee
  • Underwriting fee
  • Title insurance
  • Title search fee

Property Taxes:

Your property taxes are calculated by your local government where your property is located, and you are required to pay them as long as you own the home. These taxes are based on the value of your home or property and if over time the value is assessed to a higher value, your taxes will increase.

Homeowners and Mortgage Insurance:

Home insurance protects your property against the cost of potential damage from unforeseen circumstances. Homeowners insurance will vary as there are many options available, so it is best to shop around before deciding which one to go with. Mortgage insurance reduces the lender’s risk if you can’t make your mortgage payment.

HOA Fees:

If you are purchasing a home overseen by a homeowners association then you will be required to pay a monthly fee to the community. These fees are in place to keep shared spaces within the neighborhood maintained such as a gym, pool, or landscaping. They also protect other people’s property values by restricting a single homeowner from making a change to their home.

Maintenance Fees:

No matter where you choose to live, you will always have to keep up with regular maintenance and home repairs. Keeping extra funds on the side or setting up an emergency fund for replacing items will help you be better prepared when things break. Planning out a budget and knowing what costs to expect as you begin your home buying journey will eliminate any surprises that you may not have been prepared for.

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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.