Mortgage Tips Archives – Page 31 of 39 – Fred Gruber

09

Mar

Home Buyer Tips

It Isn’t Always a Clear Road after Pre-approval: 4 Reasons Why Your Mortgage May Be Denied

It Isn't Always a Clear Road after Pre-approval: 4 Reasons Why Your Mortgage May Be Denied So you’ve been pre-approved for a mortgage – great! You’ve taken the first step toward becoming a homeowner. But before you start picking out china patterns, you’ll want to keep in mind that a pre-approval isn’t the same thing as a mortgage agreement. There’s still no guarantee that you’ll actually get a mortgage.

But why would a lender deny a mortgage after pre-approving a borrower? Here’s what you need to know.

Sudden Changes In Income Or Employment History

A number of mortgages will require borrowers to have consistent employment for a certain length of time. If you apply for an FHA mortgage, for instance, you’ll be obligated to have an employment history dating back at least two years. Any gaps in your employment history will require a written explanation that your underwriter will need to approve.

If you switch career fields while in the process of buying a home and it has a significant impact on your income, your lender may deny your mortgage.

Credit Mismanagement After Pre-Approval

Lenders like to see consistency – so if your credit score suddenly drops after you’ve been pre-approved for a mortgage, it sends up a red flag. Even something as minor as a late payment on a cell phone bill could affect your credit score just enough to cause your lender to deny you. Pay extra attention to your bills throughout the home buying process, and make sure nothing slips past you.

Taking On More Debt In The Interim

A number of buyers will take on more debt after they’ve been pre-approved for a mortgage. Although it may be tempting to get a new car to go with your new house, getting a car loan will change your debt-to-income ratio and cause your lender to think twice about how responsible you are. If you’re in the process of buying a home, hold off on any other major purchases until after the deal has closed.

An Unsatisfactory Bank Appraisal

Sometimes, your mortgage can be denied for reasons that have nothing to do with you. Some lenders will only issue a mortgage if the property value of the house in question is appraised above a certain level. Others will deny a mortgage if the home requires roof repairs, electrical work, or a new heating system.

You’ll want to check with your lender to see what home conditions could be cause for denying your mortgage application.

Getting approved for a mortgage is a convoluted process at best, but a mortgage advisor can help you to navigate the approval process with ease. Contact your local mortgage professional for more tips on how to ensure you get approved.

29

Jan

By support

Mortagage Tips

Video: What Is “Prime”?

What Is “Prime”?

The Prime Lending Rate – sometimes just called “Prime” – is the interest rate that banks charge each other for overnight loans. Some consumer rates – like ARMs – are set in relation to Prime.

In the US, Prime is affected by the Federal Reserve lending rate to banks; historically, Prime is about 3 percent above the Fed rate.

The video shows an example.

The Federal Reserve loans to Bank A at 1%
Bank A loans to Bank B at 4%
Both banks – A & B – will recalculate variable-rate loans like ARMs on that 4% Prime figure.

ARM rates are frequently defined as “% above Prime” – that gap is usually called the “margin” or “spread.” Just remember those 3 layers in Prime: Federal Reserve Bank A Bank B And finally, YOUR rate.

14

Jan

By support

Mortagage Tips

Who Is Exempt From The VA Funding Fee?

Who is NOT required to pay the VA funding fee?

This video could save some veterans thousands. VA loan applicants pay a funding fee – as of 2014, 2.15% of the total loan amount – which can be thousands of dollars. Some veterans and spouses are eligible for exemption.

Broadly speaking, veterans who received disability benefits – current or former and who are NOT currently in debt to the government may be exempt from the funding fee. Some spouses may qualify as well.

The key thing to understand is, exemption from the funding fee is NOT automatic! Borrowers must certify their veteran status, government debt, benefits and active service state on VA Form 26-8937.

It’s important to tell your mortgage company that they need to submit this form EARLY in your home-buying process – if they just look up your records without submitting the form the VA will not begin the review and approval process and your home purchase could be delayed by weeks.