13
Dec
By Fred Gruber
Home Mortgage Tips

4 Ways to Help Your Mortgage Transaction Close On Time

When you’ve finally found the home you’re looking for at the right price, it’s easy to think that the hard part is over; however, there’s still a lot to do in order to ensure your purchase goes through without a hitch. If you’re tying up the loose ends on your home purchase, here are some things you should do to avoid any unnecessary delays.

Hire A Legal Professional

However much research you may have done in regards to buying a home, there’s still a lot of legal jargon in the closing documents that can be difficult for most people to understand. Instead of doing guesswork, you may want to use an attorney who will take the difficulty out of the documents for you so there will be no holdups with the paperwork.

Arrange A Home Inspection

A home inspection is a necessary step before the sale of a home, but this is an important one to get out of the way because it can seriously impact your home purchase. Because major problems can often be discovered during inspection, getting this out of the way and deciding if an item should be fixed or the total price knocked down will ensure there are no delays at the last minute.

Acquire Title Insurance

In order to make sure your property really belongs to you, it’s a good idea to have a title search completed to see if there are any claims to your future property that could invalidate your purchase. As this is a legal safeguard for your claim to your home, it will help you avoid unnecessary issues in the event of an unknown property claim.

Determine The Closing Costs

An escrow company is responsible for holding the funds until all aspects of a home sale are complete, but there are fees that go along with this service. Before you get to the end of the process, determine what exactly the company will be charging so that you can be prepared for the final total. While fees are legitimate, if you see a higher tally than expected, you may want to negotiate for a reduced cost.

Purchasing a home is a significant investment full of hurdles you might not be aware of, but by acquiring title insurance and having a legal professional look through your documents, you can make your home purchase go a little smoother. 

12
Dec
By Fred Gruber
Home Mortgages

Pre-approval vs. Pre-qualification

Pre-approval and pre-qualification are terms commonly used in the context of mortgage loans, but they can also apply to other types of loans. While they sound similar, they have different meanings and implications in the loan application process:

  1. Pre-qualification:

    • Definition: Pre-qualification is a preliminary assessment of a borrower’s financial situation based on information provided by the borrower. It does not involve a thorough analysis of the borrower’s credit report or an in-depth look at their ability to borrow.
    • Process: To get pre-qualified, a borrower typically provides information such as income, debt, and assets to a lender or uses an online tool. The lender uses this information to give the borrower an estimate of the mortgage amount they may qualify for.
    • Reliability: Pre-qualification is a less formal process and is not a commitment from the lender. It’s more of an estimate or a starting point for a home search.

  2. Pre-approval:

    • Definition: Pre-approval is a more formal process where a lender thoroughly evaluates a borrower’s financial background, including a detailed examination of their credit report. The lender issues a conditional commitment to lend a specific amount, contingent on the property appraisal and other conditions.
    • Process: To get pre-approved, a borrower typically completes a mortgage application and provides necessary documentation, such as pay stubs, W-2 forms, bank statements, and consent for a credit check.
    • Reliability: Pre-approval is a stronger indication of a borrower’s ability to secure a loan. It demonstrates to sellers that the borrower is a serious and qualified buyer.

In summary, pre-qualification is a preliminary assessment based on information provided by the borrower, while pre-approval involves a more comprehensive analysis, including a credit check. Pre-approval is generally more reliable and holds more weight in a real estate transaction. Keep in mind that the specific processes and requirements can vary among lenders.

07
Dec
By Fred Gruber
Mortgage

How Do Mortgage Points Cut Your Interest Costs?

Those who are involved in the real estate industry likely know that mortgage rates are at an all-time low. At the same time, nobody wants to pay more for a house than they have to. Some of the most important factors that dictate how much someone is going to pay for a house include points and interest rates.

While interest rates are incredibly low, there is a way to make them lower. This comes in the form of points. This is additional money that is paid upfront to get a better deal over the life of the loan. Even though this sounds great in theory this might not be the best option for everyone. There are a few important points to keep in mind.

What Are Points?

Often, the lender is going to offer someone the option of paying points when the mortgage is created. This should be viewed as paying interest on the loan in advance. In exchange for paying interest upfront, the lender should offer to lock in a lower interest rate over the life of the loan. The more points someone purchases, the better the rate.

For example, paying one point of interest may reduce the interest rate on the loan by 0.25 percent. This is standard. Take, for example, a $200,000 home. One point on this loan would cost someone about $2,000. In exchange, the interest rate on the loan is going to drop by 0.25 percent. This might be worth it in the long run.

Discount Points

Other people might have heard about something called discount points. This is another term for mortgage points. The two terms can be used interchangeably. Typically, people can purchase as many discount points as they want, up to the limit of the lender. 

An Overview Of Origination Points

Another type of point that people might have heard about is origination points or origination fees usually expressed by a percentage of the loan amount. These are points that are charged to the borrower to cover the processing, or originating fees for the mortgage loan. These fees are included in the total closing costs disclosed when you apply for your home loan.

Origination points are almost always negotiable. The number of origination points that a lender is going to charge can vary from place to place. Therefore, always be sure to ask about origination points. There might be a way to get these points waived, saving the borrower a significant amount of money.

As always, your trusted mortgage financing professional is the best source of information for your personal mortgage situation.