You’ve heard that getting a mortgage ranges from “insanely difficult” to “practically impossible for mere mortals,” right? However, if you have reasonable credit (600 or higher for a conventional loan) and can document your income and assets with the mortgage application, you’ll get your loan with few, if any, problems or delays.
Even though the belief that lenders have crazy-high standards today is completely false, the process of getting a mortgage today is more exacting than it once was. Underwriters, who review applications and approve loans, go over every little detail in the loan package, uncovering possible defects or problem areas.
This attention to detail doesn’t mean they’re looking for reasons to deny your loan; believe it or not, underwriters LOVE to approve loans. They are just making sure all the pieces of every loan puzzle fit together as they should.
If you understand what the underwriter is looking for, you’ll be better prepared—and your loan will sail easily through the approval process.
You’ll give your loan officer a month’s paystubs to document your income. You’ll also provide last year’s W2. If you get overtime, you’ll have to document that you’ve received it for at least 24 months. If that’s not possible, you won’t be able to use that income to qualify—no matter how much money it is.
In general, you have to show that you have been in the same line of work for at least two years. If you’ve been working at your present job for just six months, your loan officer will get information about your previous employer.
TIP: Provide all salary information for any previous jobs, along with full contact information for the previous employer(s). The underwriter WILL require a VOE from the previous employer.
Gaps in Employment
If you were laid off for a month or so, but went back to work at a different company, you’ll be fine, so long as you can explain any gap in a reasonable way.
TIP: Write a letter of explanation about any gaps in your job history. Do this before your loan officer submits your loan. It is far better to be proactive.
If you were laid off for a month or so, but went back to work at a different company, you’ll be fine, so long as you can explain any gap in a reasonable way.TIP: Write a letter of explanation about any gaps in your job history. Do this before your loan officer submits your loan. It is far better to be proactive.
No, we’re not talking about that special bottle of 30-year old scotch. If you are buying a home, you’ll have to pay cash to close your escrow. You will have to provide documentation for all money going into the transaction. If your cash is sitting in a savings account, you’ll provide two months’ full statements for that account.
This is where you can run into trouble if you’re not careful. Specifically, you’ll have to document any “large” deposits to the account. “Large” would mean deposits not identified as payroll, tax refund or transfers from other documented accounts and which exceed 10% of your gross monthly income.
TIP #1: Keep in mind that if you transfer money from another account, you’ll have to provide statements from that account as well. That account will be subject to the same kind of scrutiny.
TIP #2: While your mortgage application is in progress, avoid moving money around if possible.
TIP #3: If you receive a “large” sum of cash from some source, like selling a car, be prepared to document the receipt of those funds, assuming you deposit them into one of your accounts.
If you have a generous relative who loves you so much that they will give you a gift of cash to buy your home, you should know about the procedure for gift funds. First, your donor will sign a Gift Letter. This simple form says that they are making a gift of x-number of dollars for the purchase of your home, that it is a gift, and that it does not have to be repaid. The donor will also have to provide a full bank statement showing the source of the funds they are giving you.
TIP: Be sure your donor is aware of this procedure and is willing to hand over a full bank statement. They can’t black out or edit anything on that statement, or else the underwriter will reject it.
Your loan application will list your previous addresses for at least the last 24 months. Your credit report will show the same information—with one important difference: the credit bureaus are often completely wrong about past addresses.
One common example: you may have lived at your present address since January, 2017, and the credit report lists that. But they may also list your previous address from five years ago, but ending June, 2015. This would obviously be wrong, but it brings us to another point of advice. TIP: Check for address discrepancies on your credit report. Write a simple letter of explanation to clear up your actual residence addresses and dates.
Letters of Explanation (LOE)
These simple notes don’t have to be elaborate or wordy. Just briefly explain the issue in question. Address the LOE “To Whom It May Concern,” sign it, and date it. Being proactive will save you a great deal of time.
While it’s true that getting a mortgage is not as easy-peasy as it once was, paying attention to these details will make it seem like a breeze.
When you use these tips to cure your application headaches, you’ll have a much better experience, especially if you’re buying and selling a home at the same time.
Top 5 Tips for Alabama Home Buyers in 2018
Despite what you might have heard about home prices “cooling” in 2018, the Alabama real estate market is still red-hot in terms of competition. But home buyers can still succeed in this market. Here’s how to get off on the right foot.
1. Balance your expectations against the realities of the market.
Home buyers tend to go into the market with an extensive wish list of features, location, etc. That’s fine, as long as you balance those expectations with the realities of the housing market. And the reality, as we enter 2018, is that the Alabama real estate market is very competitive.
In January, Zillow examined the nation’s 50 largest metropolitan areas in the U.S. to create a list of the “hottest” real estate markets. The group’s analysts looked at a variety of factors including home value changes, population growth and employment.
And then there’s the inventory situation. A “balanced” real estate market has somewhere around five or six months of housing supply. But at the start of 2018, Alabama had less than a three-month supply of homes for sale. That’s a serious inventory crunch, and it underscores the importance of having realistic expectations when buying a home
2. Aim to make the first offer, and make it a strong one.
Buyers are lining up for homes – literally, in some cases. So it’s crucial to stay on top of the market. As a home buyer, you want to review the big real estate listing websites once or twice a day. And be ready to pounce when the right house comes along. Try to get your offer in as quickly as possible, and make sure it’s a strong offer backed up by comparable sales data. An experienced real estate agent can help with this.
3. Consider the surrounding area.
A lot of home buyers want to purchase a house in the newer subdivisions but simply can’t afford it. That’s understandable. And while price growth has slowed a bit, house values are expected to continue moving north over the coming months.
4. Conduct a comprehensive search.
In a competitive real estate market like we have in Alabama, home buyers need to pull every possible thread when searching for a property. Viewing the real estate listing websites is a good place to start. But don’t stop there.
Find a good agent who can help you spot properties before they hit the market, through word-of-mouth. Use your social network (friends, families and coworkers) to get a jumpstart on properties that might be coming onto the market soon.
Drive through your desired neighborhoods and look for those for-sale signs. Some sellers put up a sign but don’t list their properties online. In short, be aggressive.
5. Have your financing arranged ahead of time.
This is a topic we’ve written about before, but it bears repeating. In 2018, Alabama home buyers would be wise to have their financing lined up ahead of time, before entering the market.
Remember, current market conditions favor sellers or buyers. So anyone selling a home in Alabama can be picky and selective as it relates to financing. Among other things, they will expect buyers to have their financing all set up. This is one of several reasons why it’s a good idea to get pre-approved by a mortgage company, early on in the process.
Get pre-approved: We can help you get a jumpstart on any home in Alabama by pre-approving you for a mortgage loan. Please contact our staff with any questions you have, or to get the process started.
Why the Wood Destroying Report "WDIR"? Determining Termite Damage
Termites may be small insects that often stay out of plain sight, however, the damage they leave behind can quickly become an issue—and one that’s very expensive to fix. In the U.S. alone, these wood-destroying insects are responsible for billions of dollars of property destruction every year.
As a prospective homebuyer, you’ll want to know if these destructive pests are causing damage to the property or have left some behind in the past. A must when buying, selling, or refinancing a home, the WDIR (Wood Destroying Insect Report) is an inexpensive way to avoid problems before you seal any deal.
What is a WDIR?
A Wood Destroying Insect Report (WDIR), or a termite certificate, is a legal document usually required by the lender that has been issued by a licensed inspector. It states whether or not a particular structure has an infestation or has had one in the past. More specifically, it determines the following:
Termites are not the only wood-destroying insects that are common in the state of Pennsylvania, although they often are the most damaging. Some others include:
If you are using a real estate agent they likely will have a pest control professional that they recommend for a termite certificate, or WDIR. Make sure to ask them or research some good local companies on your own. A qualified professional will be able to spot any current wood destroying insect infestation or damage from a previous one. If they inspect the dwelling and find nothing concerning then that is one less thing you need to worry about as you look to close on your new home.
We get the argument a lot from borrowers that this should not matter but most do not realize the amount of fraud or mistakes that are on tax returns and that is why lenders have to obtain transcripts of tax returns to close a mortgage loan in many circumstances.
So to avoid delays or issues late in the process, it is best to provide all documentation requested at once and up-front. Then it can be reviewed, accurate income and debt ratios calculated, and have more confidence later in the process.
The NAHB Housing Opportunity Index shows that home prices have risen year-over-year since 2012.
Home prices are now up 40% since hitting bottom in 2011.
That's great for homeowners. Not so great for home buyers.
Chasing ever-rising prices is hard to do on a budget. As soon as a buyer has a down payment saved -- say 5% -- the price on which that percentage was based has risen.
(The solution, though, is to find loan programs with low-down payment guidelines. FHA loans require just 3.5% down, while there are now a multitude of programs offering 100% financing.)
Home prices may be tempered by rising rates in 2017.
The historic election
threw markets into a state of upheaval. The stock market raced upward, and mortgage rates followed suit.
That will put pressure on affordability in the fourth quarter. Maybe shockingly so.
But, there is an upside. Rising rates might pull the brakes on seemingly unstoppable home prices. Home values have been catapulted upward by almost-free borrowing. Home buyers were getting 30-year fixed rates in the low 3s, and fifteen year rates solidly in the 2s.
That's lower than the rate of inflation is likely to be in coming years.
Cheap money makes monthly payments lower. Homes are affordable, even at very high prices.
In 2017, though, that trend could reverse. Rising payments could mean fewer bidding wars and over-market-price offers.
The everyday home buyer might have a better chance at securing a home at a reasonable price. Affordability may continue its winning streak, despite rising rates..
2017 should remain a stellar year to be a home shopper.
A loan officer at a bank or a credit union is typically just the smiling face of the institution—the officer’s job is to accept an application that the borrower has filled out, and then hand it off to the underwriting department.
An independent loan originator, on the other hand, like PMX Group, renders more service to the borrower, including things like advising the client about the best loans available for their purposes, gathering documentation throughout the process, ordering the appraisal and communicating directly with the underwriter to ensure that the loan gets approved.
A large bank or credit union relies on the underwriting department to handle all of the above tasks—and these departments aren’t working as representatives for the borrower. The takeaway for the consumer: Mortgage rates available at an independent loan originator, whether it’s a broker or a small banker, won’t be higher than those offered through a big bank. In fact, the rates are somewhat lower, partly because independent mortgage brokers typically have more loan sources available to them compared to the big banks, which usually just have a handful of loan products to offer prospective homeowners.
So if you need a mortgage with the best rate, the best program, tailored to suite your situation call PMX Group today.
THE BEST TIME TO GET A MORTGAGE IS IN APRIL!
When the monthly rates are averaged and compared to the average over the years no big seasonal pattern emerges. These calculations involve averaging all the January rates and comparing them for the overall average of the annual rates. The calculation is repeated for each of the months. The month with the lowest average mortgage rate, according to the FHA data, is April. May and August were the next lowest, only a hundredth of a percent higher than the April average.
Now, let’s talk about the benefits of an FHA mortgage loan. While federally insured mortgages are less risky to lenders, there are also many benefits that make FHA mortgages attractive to borrowers.
A growing trend among home buyers is buying a bank owned property. Many home buyers believe that there is a great possibility of buying a home for a fraction of the appraised value and the most commonly asked question by homebuyers seems to be "Do you know of any foreclosures?"
Buying a foreclosed home can actually be a great opportunity. It is a true fact that many foreclosed homes sell for less than the appraised value. However, there are other factors to consider when looking for bank owned (REO) properties. In talking with Real Estate Agents we have compiled a list of useful information for borrowers looking for the perfect REO deal;
1. REPAIRS, RENOVATIONS AND RISK - Typically, the seller is aware of any problems with the home they are selling. However, in an REO transaction, the seller (a bank) has never lived in the home and is not familiar with it. They are unable to advise you of the repairs which are needed. This leaves the burden of uncovering necessary repairs to a home inspector. Many times, the previous owners were in distress and could not make repairs or even maintain the property. For this reason, most REO properties are sold "As Is" meaning basically, "what you see is what you get". The bank can not make any guarantees of the condition the home is in. We strongly suggest a complete home inspection by a licensed inspector along with estimates from contractors on any necessary repairs. This will help you know what to expect once you have bought the house.
2. LENDER REQUIREMENTS AND LOAN TYPES - Before you shop for a REO property, consult your mortgage originator and get pre-qualified for your mortgage. By getting pre-qualified, you will have a better idea of the type of REO you have the ability to purchase. FHA loans and Conventional loans have different guidelines and requirements concerning repairs. The type of loan you qualify for will greatly impact when and how repairs can be made. Also, the owner of the REO may have restrictions concerning when and how repairs can be made. This could turn a great deal into a challenge and cause a delay in closing or even prevent a closing! Be sure to speak with your loan originator and know your options for repairs.
3. KNOW YOUR ABILITIES - Everyone loves the idea of a "Do it yourself" project. Pinterest, Stumble Upon and other sites have inspired many people to attempt renovations and repair projects. However, certain types of renovations should only be completed by a contractor. Attempting these repairs yourself can at times cost more money than necessary and result in disappointment and frustration. Before making an offer on a REO in need of repairs ask yourself exactly how much work and time you want to devote to the house.
4. BE READY! - Even with repairs and renovations, there are many great REO properties for sale. If you are waiting on the perfect time to buy a home this is probably the right time for you. Although, you are not alone! There are many people taking advantage of the rates and opportunities available and many homes only stay on the market a few days. For this reason you should get prequalified, know your options and be ready to move quickly!
Buying a REO property can be a great investment. If this is something you are considering and think could be perfect for you please feel free to call and speak with one of our experienced loan originators. We are here to answer any questions you have!
Generation Y is the generation which follows Generation
If you are under the age of 30, you are most likely
considered a “Millennial”. This means you are part of the generation which has
been given a reputation for technological advances, social media, and pop
Did you know you are also the generation that is
responsible for a huge rise in the purchase of new homes???
It’s true! The Millennial generation is the fastest
growing population buying new homes right now! Since 2011 the housing market
has began recovering from economical difficulty and the majority of economists
and financial experts believe this is a direct result of people age 19 – 28 buying
So, if you are considering buying your first home, you are
not alone! It’s easier than ever to be one of the many young people your age
who are investing in their future and purchasing their own home!
Here is a list of things you should know to be prepared;
KNOW YOUR CREDIT SCORE – Knowing your credit score
is always important. However, when it comes to buying a home it is an absolute
necessity. Your credit score will determine your interest rate, loan type, and
loan program. These 3 items will effect what type of home you are able to
purchase and the amount you are able to spend. You can obtain a free credit
report once a year at www.annualcreditreport.com.
Once you have your credit report, be sure to check it for any errors. When you
call a loan professional for pre-qualification you will be one step ahead by
knowing where you stand with your credit score.
GET PRE-QUALIFIED – Your time is just as valuable
as anyone else. Don’t waste it! Getting pre-qualified for a mortgage is a
simple, 5 minute process and doesn’t cost anything! Take advantage of this and
have a loan professional discuss the options available for you. You may be
happily surprised to know you can expand your buying options, or that you don’t
need a down payment. This can only be determined by getting pre-qualified and
will be well worth your time.
KNOW HOW MUCH YOU CAN SPEND – By getting
pre-qualified you will have the opportunity to discuss your financial situation
with someone who is a professional. This means free advice concerning any other
debt you may have, what options you are available to you and ultimately, how
much home you can afford.
KNOW YOUR OPTIONS FOR FINANCING – There are dozens
of different programs and loan types available. Only a professional loan
originator will be familiar with each one. Instead of filling out a form and
accepting any offer, you should take advantage of the loan originators
knowledge and ensure that you know all your options. There are loan options
available which offer a lower monthly payment by eliminating mortgage
insurance, no down payments, assistance with closing costs, and many many other
benefits. Make sure you are receiving the best options for you and your family!
As always the loan professionals at Primemax Mortgage
Group are ready to help you find the best option for your home purchase.
Apply today online or in person!
And don't forget to connect with us!!!!!
Primemax Mortgage Group is committed to helping senior homeowners get more out of life. For many, a reverse mortgage could be part of the answer. In fact, considering today's economic climate, a reverse mortgage may be more important than ever in making a difference in the lives of older adults.
A reverse mortgage is simply a way for older adults to access the equity in teir home to pay for the necessities of life or some extras they may want to enjoy - all while allowing them to keep their homes. It gives them the ability to turn the value of their home into cash without having to repay a loan each month.
A reverse mortgage could be the perfect option for anyone who would enjoy access to the money they have placed in their home over their lifetime.
For more information please call us! There is no risk and no obligation!
All mortgages are
different. Different borrowers mean the situations, loan types, amounts, down
payments, and virtually every other detail of the loan are different and
unique. However, there is one thing that virtually every loan has in common;
From the first time
home buyer, to the couple that is refinancing a current home, or the individual
who is using a reverse mortgage for retirement, every borrower has questions.
For this reason you should never feel as though you are wrong for asking those
questions. As your mortgage
professional, it is our duty to ensure that you are fully comfortable with your
mortgage and that it is tailored to suit your specific situation. Many times,
borrowers feel as though they are supposed to already know how the home buying
and financing process works. This is a common myth that couldn’t be further
from the truth. The truth is, we are professionals who spend hours each week
learning the ever changing laws, regulations, programs and monitoring rates.
That is our job. Your job, as the borrower, is to provide us with information
about your situation, and, you guessed it, ask questions! This is the only way
your loan originator can provide you with the mortgage that will best suit your
So the next time you
are buying or refinancing, just remember… all you have to do is ask!
Closing a loan is the happy end to the process of buying a home. The buyer, seller, real estate agents and loan officer sit down at the closing table with an attorney who reviews all the documents, obtains signatures and the ownership of a home is transferred.
Unfortunately, many people think this is not a realistic hope for their lives. Many people feel that their situation does not allow them to purchase a home and feel the satisfaction that comes with holding a set of keys in their hands after a closing.
This was true for Lynn and Kelly.
Lynn had never owned a home before, but had dreamed of a place he could give his wife as their own. After finding a home that was perfect for them, Lynn set out to find the right mortgage. Unfortunately, he was met with discouragement. After being denied, Lynn was feeling as though this dream would remain only a dream and never be possible for he and his wife. Before cancelling his contract, Lynn called Primemax, a company he had seen on Linked-In. Regina Rickles took his call and within 15 minutes had him preapproved.
Three weeks later, Lynn sat down at a closing table with his wife Kelly and heard the words he thought were impossible... "Congratulations, your a homeowner".
After the closing Lynn said there was one thing on his mind.
"I want people to know there is hope. I never thought this would happen. I had given up. People should know that its not hopeless, that there is help and they can buy a home too."
Congratulations to Lynn and Kelly, another pair of hopeful and happy PrimeMax Customers!