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Questions Lenders Ask You

November 19th, 2009
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What should you expect to be asked when you try to qualify for a San Diego mortgage loan?

Questions to Expect From Mortgage LendersData Provided By Know what to expect before you apply.

Your mortgage lender will want to know a lot about you before approving your loan application, and justifiably so; they and their underwriters want to be assured that you meet their minimum level of creditworthiness before lending you money.
Areas of questioning.

Here are the general areas of questioning you can expect from a lender: 
1. Employment and income 
2. Outstanding debts 
3. Cash reserves and assets 
4. Down payment 
5. Loan purpose 
6. Property use 
7. Property type
 
Employment and income
Where do you work?
How much do you make?
How long have you been at your job?
How is your income derived — steady salary or irregular income? If it’s the latter, you may need to provide more details to obtain a favorable interest rate.
Outstanding debts
What recurring debts do you have?
How much do you pay a month for auto loans?
Credit cards? How much of your monthly pretax income do these debts consume?
Cash reserves and assets
How much money do you have in the bank?
How much will be left after you pay your down payment and closing costs?
Down payment
How much money are you putting down?
Is this your own money?
If not, is it a gift from your parents?
A nonprofit agency grant?
Loan purpose
Is this San Diego ca mortgage for a home buy or refinance?
If it’s a refinance, do you want to take cash out at closing to pay off other debts? If so, how much?
Property use
Do you plan to live in the house?
Is it investment property?
Property type
A condominium?
A duplex?
The following responses tend to work in your favor:
Steady employment (two or more years) with the same employer or in same line of work.
Low debt: no recent major buys (such as automobiles) and a debt-to-income ratio of 36 percent or less.
Loan is for straight home purchase (or rate-and-term refinance).
Property is detached single-family home to be used as primary residence.
Down payment of at least 5 percent of sales price with your own money.
You’ll have at least two months’ worth of mortgage payments in the bank after closing.
These responses tend to work against you:
Self-employed or contract worker.
High debt: credit cards maxed out, total debt-to-income ratio more than 36 percent.
Property is a duplex or condominium, to be used as a vacation home or rental.
No cash left after home buy and closing costs.
Down payment is 3 percent or less of buy price and money is borrowed.
Source: Move.com

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What Questions To Ask Your Lender

November 7th, 2009
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The Ten Questions To Ask Your Lender

 Here are the 10 key questions to ask at application time to help you find the best overall mortgage loan. If you have already selected a lender and are ready to apply, make sure you have the answers to these questions first.
  
1. What is the interest rate on this mortgage? 
2. How many discount and origination points will I pay? 
3. What are the closing costs? 
4. When can I lock the interest rate and what will it cost me to do so? 
5. Is there a prepayment penalty on this loan? 
6. What is the minimum down payment required for this loan? 
7. What are the qualifying guidelines for this loan? 
8. What documents will I have to provide? 
9. How long will it take to process my loan application? 
10. What might delay approval of my loan?
Once you’ve narrowed the lender field to a short list of finalists, it’s time to compare their offers.
 
1. What is the interest rate on this mortgage?
To determine exactly what you’ll pay over the term of the loan, you need to know the rate. Rates change quickly, and if your credit is less than perfect, you may not be offered the lender’s lowest figure.
To effectively compare different lenders’ programs, ask for the annual percentage rate (APR) of the San Diego Ca mortgage interest, which is generally higher than the initial quoted rate because it includes some fees. But beware: the APR found in advertisements can be misleading. Mortgage lenders don’t always include all the fees they charge in the calculation that determines APR, so customers who use that figure to shop rather than an itemized breakdown of rates, points and fees may end up comparing apples to oranges.
2. How many discount and origination points will I pay?
Lenders may charge prepaid mortgage interest points to lower your interest rate or other points that have no benefit to you at all. Find out how many you’ll be expected to pay and which kind of points they will be.
3. What are the closing costs?
Mortgages come with fees for services provided by lenders and other parties involved in the transaction. You want to know what those fees will be as early as possible. Lenders are required to provide a written good faith estimate of closing costs within three days of receiving a loan application.
4. When can I lock the interest rate and what will it cost me to do so?
Your interest rate might fluctuate between the time you apply and closing. To prevent it from going up, you may want to lock the rate, and even points, for a specified period. Ask your lender if lock fees apply. Also, find out what the experts are expecting rates to do, read Rate Trend Index.
5. Is there a prepayment penalty on this loan?
There may be a prepayment penalty on your loan. Some penalties are 1 percent of the loan amount, others are equal to six months’ interest, some apply only when you refinance or reduce the principal balance by more than 20 percent, and some kick in if you sell your home. Find out the duration of any penalty period and how the penalty is calculated. Some lenders offer lower interest rates to buyers who accept prepayment penalties.
6. What is the minimum down payment required for this loan?
The rate and terms of your loan will be based on a down payment figure, typically 3 to 20 percent of the buy price. If you can put more money down, you may be able to lower your rate and improve your terms; if you come up short, you may be required to get private mortgage insurance (PMI).
7. What are the qualifying guidelines for this loan?
These requirements relate to your income, employment, assets, liabilities and credit history. First-time home buyer programs, VA loans and other government-sponsored mortgage programs typically offer easier qualifying guidelines than conventional loans.
8. What documents will I have to provide?
Most lenders will require proof of income and assets before approving your loan, and may require other documents as well. Buyers with excellent credit may qualify for a no-documentation or “no-doc” loan, but they can expect to pay a hefty down payment and higher interest rate.
9. How long will it take to process my loan application?
The answer will depend on several variables. When the loan business is brisk, underwriters get backed up, verification takes longer, appraisals move slower and other bottlenecks develop along the loan pipeline. Lenders may say two weeks, but 45 to 60 days is probably more realistic in most cases. You’ll need their best guess to determine how long to lock in your loan.
10. What might delay approval of my loan?
If you provide the lender with complete, accurate information, the loan process should run smoothly. If the underwriter discovers credit problems, there could be delays. Make sure you notify your lender if you change jobs, increase or decrease your salary, incur additional debt or change marital status between the time you submit an application and the time the loan is funded.
Put these 10 questions to your leading candidates and compare their answers. The results should lead you toward the mortgage lender that is right for you.
Source: Move.com
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Qualify For A San Diego Mortgage

November 1st, 2009
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Qualifying for a Mortgage

Sponsored By
Here’s the formula bank lenders use to determine how much mortgage you can afford?
 
 Don’t start house hunting until you seriously consider how much you can afford to pay. A little advance planning will save you time and money later, because you won’t bid on unattainable houses or apply for mortgage loans that are out of your ballpark.
How much house can you afford?
You may hear an old formula that says you can afford a house worth about three times your total (gross) annual income. Don’t rely on this formula, however — it’s much safer to look at your own budget, figuring out how much you have to spare, and what the monthly payments on your new house will be (not just the mortgage — factor in taxes, insurance, maintenance, and more).
Lenders have traditionally wanted you to make all monthly payments using no more than 28 to 44 percent of your monthly income. In other words, if your monthly income is $2,000, the lender would want you to pay no more than $880 (.44 x $2,000) toward all your debts.
These traditions are, however, becoming less rigid — now, if you have an excellent credit record, a lender might allow you to go more deeply into debt. But you’ll need to use your own common sense, and make sure you leave yourself some money with which to buy furniture, cope with a job layoff, or simply enjoy life.
For a sneak peak at how much of a mortgage you’ll be able to qualify for, see Nolo’s calculator on qualifying for mortgages.
 
Check your credit history
When reviewing loan applications and making financing decisions, lenders typically request that the credit bureaus reporting your file — Equifax, Experian, or TransUnion — provide your credit risk score (also known as your FICO score). This seemingly mysterious number represents a statistical summary of the information in your credit report, including things like your history of paying bills on time and the level of your outstanding debts.
 
Higher FICO Credit Scores mean you can qualify for a larger San Diego Ca Mortgage loan.
 
The higher your credit score, the easier it will be to get a loan. If you routinely pay your bills late, expect a lower score, in which case a lender may either reject your loan application or insist on a very large down payment or high interest rate (to lower its risk).
Because your credit history has such an important effect on the type and amount of mortgage loan you’ll be offered, check your credit report and clean up your file if necessary — before, not after, you apply for a mortgage.
Loan preapproval vs. loan prequalification
Once you’ve done the basic calculations and completed a financial statement, you can ask a lender or loan broker for a prequalification letter saying that a mortgage loan approval for a specified amount is likely based on your income and credit history. Prequalifying lets you determine exactly how much you’ll be able to borrow and how much you’ll need for a down payment and closing costs.
Unless you’re in a very slow real estate market however, with lots more sellers than buyers, you will want to do more than prequalify for a San Diego Ca Mortgage loan: You will want to be preapproved — that is, guaranteed — for a specific loan amount. This means a lender has already checked your credit and evaluated your financial situation, rather than simply relied on your own statements. Preapproval means that the lender would actually fund the loan, pending an appraisal of the property, title report, and purchase contract.
For more information on deciding how much of a loan you can safely take on and successfully qualifying for the loan, see Nolo’s Essential Guide to Buying Your First Home, by Ilona Bray, Alayna Schroeder and Marcia Stewart.
 
Note: By qualifying a mortgage you will be in a much better negotiating position when it comes time to make an offer on your new home.  Mike Kench
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Mortgage Loan Refinancing

October 18th, 2009
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Homeowners interested in a home mortgage refinancing program have a few options to consider. Here are some things to consider.

Fixed vs Adjustable Rates

A typical fixed rate example has a fifteen or thirty year term and a fixed rate. This is a popular choice for a San Diego Ca Mortgage option because the consumer knows that his interest rate will not change during the life of the loan. The fifteen-year term is a comfortable timeframe for many customers as well, although a thirty year term can also be the better choice for some. Many San Diego homeowners are more attracted to an adjustable rate San Diego mortgage loan. This option can actually cost less in the long run. However, it is a bit of a gamble. If interest rates increase, so does your home mortgage loan rate. If you can afford it if rates increase, and weigh the possibility of higher rates, then to refinance home loans with an adjustable rate can save money. And if the rates are in your favor, this option can really help with your monthly expenses over the course of time.

Costs To refinance your home mortgage loan

Remember, there are charges for a San Diego Ca mortgage home loan refinance. At times the costs outweigh the benefits. However, in many cases the homeowner can save a significant amount of money throughout the term of the loan. When consumers refinance home loans, they are not simply reducing your payments or changing your interest rates. This process consists of paying off the original loan in full. The refinanced loan is completely new in spite of the fact that you have been making payments for the same property. Since the mortgage loan is brand new according to the lender, it is subject to the same fees, points and other fees you paid for your initial mortgage loan agreement.

There is another significant fee that many homeowners do not consider when they try to get a San Diego home mortgage refinancing loan. Pre-payment penalties can be pretty costly, and you should not get a loan that includes them. You can check with your lender and with the regulations in your state to see if the pre-payment penalties apply to your specific loan or not.

The process of finding the right home mortgage refinancing package does require some preparation and homework. However, you can find a great deal that will pay off over time.

Source sportyhealth.com

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Freddie Mac Refinance Rules

October 16th, 2009
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The Government’s Freddie Mac Relief Refinance Mortgage rules:

The governmenst main objective is to assit borrowers of Freddie Mac guaranteed, insured home loans, to keep their homes affordable and reduce foreclosures by keeping payments affordable. Under Freddie Mac’s Home Affordable Refinance program, known as the Relief Refinance Mortgage, the program may be used to reduce the borrower’s loan interest rate, shorten the loan term repayment period or replace an adjustable-rate mortgage, interest-only mortgage or balloon/reset mortgage with a fixed-rate loan.

How to qualify for the new refinance program, first the borrower must have an existing mortgage that is owned or guaranteed by Freddie Mac. To find out whether Freddie Mac owns or guarantees your loan, call (800) 373-3343, call your San Diego loan mortgage servicer, San Diego Mortgage Broker or search for your loan on Freddie Mac’s Web site at Freddiemac.org.

You should contact your original lender or loan servicer to apply for this program.

The property may be a vacation/second home if the existing San Diego Ca mortgage was originated as a second-home loan or the borrower now occupies the home as a principal residence.

The new Freddie Mac Refinance mortgage can be a 15-, 20- or 30-year, fixed-rate loan or an adjustable-rate mortgage  with an initial term of five, seven or 10 years. The loan must be fully amortizing (i.e., not an interest-only or payment-option loan).

If you have an existing fixed-rate mortgage loan, than the lender can not refinance with an ” ARM”  Adjustable Rate Mortgage.

The loan, may be a so-called “super-conforming” loan limit within the applicable loan limit for the area.

The property may be an investment property if the existing San Diego Ca mortgage was originated as an investment property or the borrower now occupies the home as a principal residence.
 
If the original loan is covered by mortgage insurance, the insurer must agree to transfer the insurance to the new loan.

The new loan cannot be used to make a payment on or pay off a second loan.

Lenders are encouraged to use Freddie Mac’s automated valuation model, or AVM, to estimate the property’s current market value. Borrowers should ask whether a new appraisal will be required.

The borrower may be able to finance transaction costs of up to $2,500.
Borrowers whose monthly payment increases 20 percent or more must provide income and employment documentation and have an acceptable credit score and debt-to-income ratio to demonstrate they can afford the new higher payment.

If your loan does not meet these qualifications and you can not qualify for a typical refinance program,  You may want to consider modifying your home loan with a home loan mortgage modification.  This will allow you to lower your monthly mortgage payments, lower your current interest rate on youir San Diego California mortgage, or possibly reduce the principal balane of your home loan mortgage.

More information can be obtained at the Freddie Mae web site or at the Home affordable modification webs site.

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