Don’t Fear a Conditional Mortgage Approval

a mortgage loanSo you received your home loan pre-approval application papers and see that there’s a note on it that says “approved with conditions”. Now you probably think that you’ve been approved for a mortgage. But wait, what about the conditions? Have you been approved or not?

Understanding a Conditional Mortgage Approval

A condition approval on a mortgage application means that the underwriter is more or less satisfied with your application documents, but that you need to resolve some “conditions” to be approved, explains an experienced home loan officer from VIP Mortgage in Tempe. The mortgage underwriter is assigned by your potential lender to review your loan application documents to make certain that it satisfies all the requirements and guidelines of the lender.

If the underwriter decides that everything seems to be in order with your application, but certain things need some clarification, you’d be issued a conditional approval. In most instances, underwriters usually request for clarification on the following issues or a copy of certain documents:

  • A letter of explanation in case you made a recent, sizable deposit or withdrawal
  • Verification of your current income and/or employment
  • Your mortgage insurance documents
  • A copy of your homeowner’s insurance plan
  • Other incomplete or missing paperwork require for loan funding

Take note that the underwriting process would differ significantly from the borrower to another such that you might receive other conditions during the underwriting process, while a friend that’s going through underwriting might get approved by the underwriter without any conditions whatsoever.

So Will My Mortgage Go Through?

Mortgage approval involves various stages, with the last being the final approval, when your mortgage would be funded before or during closing day. That said, it’s vital to understand that things could go awry at any stage during the entire process and the best thing that you could do once you receive your conditional approval is to satisfy the underwriter’s conditions as promptly as possible because your application would essentially be on hold until you could meet the conditions. Be proactive and patient to avoid further delays and get the ball rolling on your final approval.

Why You Should Take Advantage of the VA Home Loan

Woman holding a small dollhouse Veterans Affairs or VA loans are housing loans offered to eligible VA members, veterans, and surviving spouses. According to 1unitedmortgage.com, this type of loan is more lenient on the application requirements. This allows for a simpler process and faster loan release.

Lending Facility

The U.S. Department of Veterans Affairs guarantees VA loans as part of the veterans’ benefits. It helps qualified members to finance the sale, building, repair, or retention of their home. The borrower does not have to put up a down payment, and mortgage insurance is also not required for VA loans.

The loans can cover up to 100% of the cost of the home. It can be more than the property’s reasonable value due to funding fees, which can be up to 3.3%. The largest loan amount with no down payment depends on the location and is usually up to $453,100. This may go as high as $721,050 in areas specified as “high-cost counties.”

For the Veterans

The history of the VA loan starts at the end of World War II, which allowed veterans to borrow money for homes and farms. Since its start, the VA has insured more than 20 million loans. In 1970, the coverage was expanded with the removal of termination dates for applying for housing loans. The same year saw the introduction of an amendment allowing for the guarantee of mobile homes.

The Veterans Housing Benefits Improvement Act of 1978 added more benefits. In 1992, the program was available only to those who had served on active duty during specific years or periods. Reservists and members of the National Guard who have served honorably for more than six years were also given this benefit.

The VA loan is a big help to veterans, active service members, and qualified spouses. They can take out affordable home loans to buy their own home, or improve their existing home at affordable rates even without a down payment.

How Does a Home Equity Line of Credit Work?

Home Equity Line CreditIf you are looking for some way to obtain some money using your house without having to sell it, you have probably heard about the HELOC or home equity line of credit. But what is it exactly? How does it work, and most importantly, how can it help you? If you have done some research on it but are still unsure, read on to find out.

What Exactly is a HELOC?

A home equity line of credit essentially enables qualified homeowners to borrow money by using their home equity as their collateral for the loan, explains experienced mortgage brokers in Fort Myers. They add that a HELOC works just like your typical credit card, you could borrow money as needed, up to the limit of your loan, and over the loan term, which is typically between five to 20 years. Your lender might even give you a plastic card similar to a credit card so that you could access your borrowed funds easily.

HELOCs work well for borrowers who need to borrow money but are uncertain how much money they need to borrow. It’s also great for individuals who don’t have to borrow a huge amount upfront but need to pay for something over time, such as major home improvements, tuition for college, or healthcare needs. For instance, let’s say that you’re planning a complete kitchen renovation and adding an extra room in your home, and your contractor gave you an estimate of $55,000 for the entire project. You could take out a HELOC amounting to $55,000 so that you could pay for the labor, services, and materials over time, as you receive the bills.

With all this in mind, HELOCs are best used for major home upgrades, or huge, unexpected or expected expenses that you can’t cover with your savings, such as school tuition and hospital bills. You shouldn’t use it to make ends meet, for daily living expenses, for unnecessary expenses like a vacation abroad, or if you don’t need a sizeable line of credit.

The Takeaway

There might come the point in your life that you need additional money for crucial expenses, and a HELOC just might be the answer you need for your financial woes. And since a HELOC would be secured against your home’s value, lenders would be willing to give lower rates. On the other hand, a HELOC is still a loan that must be repaid on time, every time, and should you fail to repay it; you would be putting your home at risk. That being said, do your due diligence and speak with potential lenders to determine if a HELOC or some other type of loan might be right for you.

Applying for Mortgage? Avoid These 3 Mistakes

Mortgage ContractA lot of people commit costly mistakes that are easily avoidable when looking for the right mortgage. In fact, it even costs them their hard-earned money. That’s why it’s essential to choose the right loan lenders in FL to get the right mortgage that’ll fit your budget, notes Monroe Funding Corporation.

Here are a few of the most common mortgage errors that you should avoid.

Considering Only One Lender

Whether you’re buying a new car or the latest gadget, it’s always best to shop around and look for the best deal. The problem is a huge portion of mortgage applicants immediately consider the first mortgage provider that they can find. It’s essential to shop around when looking for a mortgage provider. Doing so will give you a better chance of finding the best deal at just the right price.

Setting Aside Most of Your Salary for Mortgage Payment

Another common mistake that some homeowners make is putting a huge portion of their monthly salary to their mortgage alone. Always keep in mind that there are other bills to take care of other than your monthly mortgage payments. Putting too much on your house loans each month will give you less space for other expenses such as your monthly bills and even your retirement.

Failing to Learn About the Entire Process

Most homeowners would often tell you how complicated and time-consuming the entire home loan application may be. That’s why it’s essential to arm yourself with knowledge so that you’ll have an idea on how the entire process works.

There are times when the problem doesn’t really start with the lender but with the loan applicant. So it’s always best to ask as many questions as you can so you can fully understand the process.

Why Mortgage Search Should Precede Property Search?

Mortgage Loan AgreementWhen buying a house, many homeowners shop around for properties first before mortgages. After all, exploring the real estate market is more fun and exciting while negotiating with one lender after another is tedious and overwhelming. Although this is true, focusing on the home loan at the start is more logical.

Here’s why experts at American Bank & Trust think you should consider your mortgage loan application as a top priority:

Narrowing Your Property Options Down

Negotiating with lenders before visiting open houses and calling real estate agents gives you an idea of the highest amount of money you borrow. When you know your price range, you can avoid wasting your time and energy pay attention to properties beyond your means. Unless you want to daydream, getting attached to a house for sale that you can’t afford can be heartbreaking.

Understanding What You Need to Work on

Learning how mortgages work, familiarizing yourself with important jargons, and comparing home loans takes time. You may think that it’s just an inconvenient hurdle, but obtaining financing is an important step to achieve your homeownership successfully. There’s so much to learn about the process that you can’t master overnight.

Paying attention to mortgages early allows you to take a 360-degree view of your financial situation. It tells you about your strengths and weaknesses, giving the chance to continue your good habits and ditch the bad ones consciously. If you’re too concentrated on property search, you might spend years trying to buy a house.

Determining Whether You Can Afford to Buy a Property

Most importantly, mortgage applications are a reality check. Considering that lenders scrutinize not just your credit score but also your income, employment history, and cash reserves, they force you to evaluate your financials.

Many things have to happen before you can say that you’re mortgage-ready. You ought to pay off most of your debts, have an emergency fund, and still come up with a decent down payment. Only when you accomplished them all, you can seriously dream of becoming a homeowner.

Don’t underestimate the effort necessary to obtain a home loan successfully. If you get past the mortgage front, everything else should go smooth sailing.

Reverse Mortgage: What Happens If Your Home’s Value is Lower Than What You Owe

a houseIf the loan balance of my reverse mortgage program loan is higher than my house’s value due to my house’s value significantly dropping, what should I do? Also, my children are planning on keeping the house when I die. Would they need to pay off the entire balance of my reverse mortgage loan even if it is substantially higher than my home’s market value?

The Answer…

It would mainly be dependent on your specific kind of revere mortgage. The FHA or Federal Housing Administration insures the majority of reverse mortgage loans these days as part of the HECM or Home Equity Conversion Mortgage program. Loans under this program are non-recourse, which means that if your house would be sold to pay off your reverse mortgage, neither you nor your children would be required to repay more than your home’s sales price. Your insurance would setter any deficit, provided that your house sells for 95% at the least of its current market value.

If your children are looking to keep your house either when you permanently move out or pass away rather than selling it, then they would need to repay your reverse mortgage. However, they won’t need to repay more than what your house is worth. If your balance is higher than the worth of your house, they would only need to pay 95% of your house’s current market value and FHA insurance would take care of the rest.

On the other hand, if what you owe were less than your home’s worth, your children would only need to settle the balance. Your children could repay the required 95% in cash or by taking out a standard mortgage. But they would still have to undergo the usual process for taking out a new mortgage.

Other Important Things to Note

If you are an heir to a house with a reverse mortgage loan, it’s best to discuss your circumstanced with the loan servicing company. In general, the loan servicing company would give you a couple of months to decide on what you want to do, but this period would vary from lender to lender. Just stay in touch with the lender and make sure to communicate your plans, whether you want to refinance, sell the house, or just walk away.

9 Tips for Buying a Home Without Regrets

Beautiful home for saleBuying a house is a perhaps one of the biggest things you will pursue this year. The least you’d want is to make a wrong decision because this can instantly turn your dreams into regret. Before you head to buying right away, read this guide and save yourself from trouble.

Do not skip research

Some homebuyers are eager to have a house right away that they neglect research, which is a huge no-no. You should never skip this crucial part because doing so allows you to know your options. Remember to include property taxes and insurance costs as well when you do your research.

Know your needs

Do not focus merely on wants, but more importantly, you should consider your needs. According to a survey by HSH.com, only 20% of 2,000 US homebuyers had no regrets with their home. It turned out the most common complaints of the other 80% were a house that’s too small, not enough storage, a noisy neighborhood, and high maintenance costs. You can avoid regrets like these when you consider your needs and future plans when choosing a property.

Set a budget

Never set a budget that’s far beyond your means. Most lenders would agree that your house should not be three times more than your yearly income if making only a 20% down payment.

Improve your credit score

There’s no better way to get prequalified for a home loan faster than to have a good credit standing. Prmishoreline.com explains that a bad credit score does not only make it difficult to find a lender, but it would also require you to pay bigger down payments.

Apply for a mortgage

Have your financing ready before checking out properties. Explore your options and find a home loan program that fits your means.

Choose a house

It’s easy to pick a house if you will just consider the design and layout. However, choosing a property involves finding the right location, size, neighborhood, and price. Choose wisely, take your time, and don’t miss home inspection.

Get the home appraised

Know the real value of the property when you get it appraised. This could save you thousands of dollars. Through it, you would also know if you’re being duped or not.

Prepare all paperwork

You will be surprised to know that there’s too much paperwork to prepare when buying a property. Your lender and a title company might work together to help you handle this task.

Make the deal

Have all paperwork signed and return this to the lender. It will only take a few days for your loan to become effective. Also, have some cash ready for closing costs.

Buying a home only becomes complicated when you neglect research and planning. Save yourself a lot of troubles when you follow this home-buying guide.

3 Signs You Have Found the Perfect Property to Buy

a couple buying a homeWhen you are buying a house for the first time, you may find that you have some fears about making the wrong decision. You are not alone. Buying property is a huge decision, one that you cannot afford to make a mistake, because it may cost you.

Here are three signs that a home is perfect for you.

You can afford the total cost

The property broker will usually quote the price of a property, but not include any other charges you may incur in the purchase. It is up to you to find out what these costs are. Much of this information is usually readily accessible.

To find out how much stamp duty you will need to pay, for instance, you can use a stamp duty calculator available online.

The house feels comfortable when you enter

You will know you want to live in a home within the first few seconds of opening the front door. If the house feels warm and inviting, then it is probably the one. A suitable home invites you to explore.

You do not feel funny about walking into the bathroom, but feel nice about opening the shower door and stroking the marble.

You can already see where everything will go

You will have no trouble envisioning the arrangement of your potential home. If you already see how perfectly the bed will fit a certain wall the moment you enter the master bedroom, you may just have found the right home.

Take a look at the living room. Can you already see where the tree will go come Christmas? Then you are hooked.

There something about a house that tells you that it is the right fit for you. By evaluating how you feel about the property as you go through it and being sure you can afford its overall cost, it becomes easy to know whether this is your home or not.