City Creek Mortgage News

When purchasing a new home or refinancing a current home, you will always encounter the same lineup of employees. To help you understand who will be part of the process of your home loan, here’s a breakdown of each person and the role they play. 

 

Talking with Your Home Loan Lender

The process will always start with you having a conversation with the lender. With a healthy bank balance or savings account, you can expect this conversation to flow. However, there is no yes or no answer at this point and your lender will simply connect you with a loan officer in order to further your home loan application. 

 

The Loan Officer

A loan officer is a representative of a bank, credit union, or other financial institution who assists borrowers in the application process. Loan officers are often called mortgage loan officers since that is the most complex and costly type of loan most consumers encounter.

A loan officer is a representative from a lending institution that will assist with your home loan application. These individuals deal with all types of loans but mostly home loans, for these are the most complex and costly to sort out. More specifically, a loan officer will provide you with options and products, and then advise in terms of the application process for “approval in principle” – a provisional type of approval. And this is where the underwriters come into play, but not before a loan processor has compiled all necessary documentation for your application.

The Loan Processor

The mortgage processor is tasked with preparing the documentation for your home loan application. With this in mind, a loan processor works between the underwriter and the loan officer. As for the documents, this not only refers to application forms but also any relevant documents which will be required by underwriters. For instance, a loan processor will source bank statements, bills and any other documents related to your income and expenditure. It’s also a very important job because the more accurate a loan processor can be with this information, the faster and more efficiently an underwriter can work toward a decision.

 

The Home Loan Underwriter

A home loan underwriter is responsible for either approving or rejecting your application. They must compile a risk report to make this decision and try to demonstrate how the report is in line with the guidelines of your lender.

As part of this process, an underwriter will obtain various credit reports and then assess the income, assets and debts associated with your profile. If there is any potential collateral that can be used against the loan, this is also taken into consideration. It’s possible for underwriters to then assess the risks associated with mortgage repayments and apply certain conditions to the home loan. Either way, the underwriter will then reject or approve your application and relay this information to your lender who will then get back in touch with you.

 

Final Thoughts

As you can see, there is much documentation to be sorted for your home loan application and these individuals hasten the process. There are also different options and products for individual circumstances and you need the assistance of a loan officer to choose the right one. That being said, it’s always best to know where you stand as soon as possible and the first step toward a home loan is simply talking with your lender.

Have you ever wondered how a mortgage lender gets paid? It’s a common question when it comes to buying a property but also one that often seems to confuse the average homeowner. Mortgage lenders have various avenues in which they can make money, from origination fees and closing fees to underwriting and application processing.

In this article, we take a closer look at the process and how mortgage lenders make their money.

What is a Mortgage Lender Exactly?

A mortgage lender is an institution that provides and underwrites loans for homebuyers. Each mortgage lender has a different set of rules or guidelines which they use to assess the risk in terms of providing an individual with a home loan.

More specifically, a mortgage lender will decide on the interest rate, term and payment schedule for home loans. This institution will also lay out a specific set of terms by which the homeowner must abide for the duration of the loan.

But how does a mortgage lender get paid?

How a Mortgage Lender Gets Paid

A mortgage lender can get paid in many different ways such as yield spread premiums, closing costs and selling mortgage backed securities. Let’s take a quick look at some of the most common ways in which a mortgage lender will get paid:

Yield Spread – A yield spread premium is the difference between an interest rate provided by a lender and the rate that lenders pay to replace that money. Mortgage lenders can account for this amount/difference as a source of income.

Origination Fee – A lender will charge a fee to borrowers for creating a mortgage loan. This fee sometimes includes the application or processing fee and other admin services and often increases over time.

Closing Costs – Many lenders will not only charge an origination fee but also an application fee, underwriting fee and processing fee. You should always check the extent of these fees with a lender before going ahead with a loan.

Discount Points – Discount points are used to buy down the interest rate of a mortgage. Homebuyers can pay upfront for discount points in order to bring down the amount they repay each month. The impact in this respect will depend on the type of mortgage, market conditions and the actual lender.

Mortgage-Backed Securities – Mortgage lenders usually group loans together and place them in a mortgage back security. These are then sold for profit to investors, funds etc and provide instant capital to the lender in return.

Loan Servicing – Lenders can also earn money by servicing loans. For instance, if a mortgage backed security is sold to an investor who cannot process the payments, the lender can continue to perform this task on behalf of the investor in return for a percentage of the payment.

As you can see, a mortgage lender will have many different forms of revenue and understanding the significance of these fees can even help save you thousands on your monthly repayments. At City Creek Mortgage all of our loan officers are salaried. They are compensated the same regardless of the loan you choose. Because of that, we provide our customers the loan that will help them save the most money.

If you’re ready to save thousands by not paying fatty commissions that end up in the pocket of your lender, contact City Creek Mortgage today.

 

 

For most sellers, it’s fully expected that buyers will have pre-approval from a lender before they start negotiating. However, you should also know that a mortgage lender will always ask for things like proof of assets and documentation relating to your income and employment. 

In this article, we take a quick look at what you will need to provide for your mortgage lender:

What Will My Mortgage Lender Ask For? 

If you need mortgage approval, it’s necessary that you provide certain information and documentation to a mortgage lender. These requirements are non-negotiable for a mortgage lender and the only way they can reduce the risks associated with granting a loan. Here are some of the most common requirements that your mortgage lender will require to get started:

  1. Proof of Income – You will need to provide copies of your recent wage statements. These statements should illustrate the amount earned to date and proof of any other type of income.
  2. Proof of Assets – You will need proof that you have investments or money in the bank at the very least. It’s important to note that you must have enough money for the downpayment and also funds in reserve to minimize risk.
  3. Good Credit – Lenders will ask that you have a good credit score and this often needs to be above 650 to apply for a mortgage. That said, if you have a credit score above 760, you will likely be offered lower interest rates by the lender. In case you might have a lower credit score, it’s likely the lender will require a bigger sum with regard to the down payment.
  4. Employment Verification – Lenders will always seek to ensure that you have stable employment before agreeing to lend any money. They will ask for pay statements and also contact details for your employer so they can verify that you work there. If you are self employed, you will need to provide additional documentation about your business and income.

    In short, your lender just wants to make sure that you can continue to repay this loan in the long term and that your employment status is unlikely to be affected. Also, your lender will usually require that you provide at least two years of documentation/statement with your application. 

  5. Misc Documentation – Every lender will ask for your social security number, signature and drivers license. These details will enable the lender to check your credit score and also feel satisfied that you are providing sufficient documentation or proof to support your application.

 

Summary: Requirements for Mortgage Approval

Your mortgage lender will ask for proof of income and employment and official documentation to verify your identity. Your social security information is just as important and these details will allow your lender to pull a credit report and assess your suitability for a mortgage. As already mentioned, you will need mortgage approval before placing any bids on a house and the more open or forthcoming you are with your mortgage application, the smoother you should find the process. To speak to a salary-based loan officer, contact City Creek Mortgage today.

Buyers benefit from having a loan officer on board during the application process. For most buyers, this means they can ensure the right documentation is compiled for their application.

It’s also a great way to save time, for a loan officer will already know about the relevant rules and regulations which may apply. Let’s take a closer look at the role of a loan officer.

 

What is a Loan Officer Exactly?

Every bank or financial institution will have a designated loan officer that can assist prospective buyers during the loan application process. These individuals will most often work with home loans in particular because these types of loans are usually the most costly and complex. 

At the same time, a loan officer is knowledgeable about the many nuances which might affect a loan application process. With this in mind, a loan officer is nicely placed to give advice and options to home buyers, regardless of their personal, professional or financial circumstances.

This essentially means that a loan officer can not only advise which products of which you can avail but also help you when it comes to choosing the right one. Just so you know, a loan officer will use a screening process in such instances and compare the many products available with the intricacies of an application.

But what does this actually look like?

Working with a Loan Officer: Taking a Look at the Process

 

A loan officer can do most of his/her work online. While some buyers will appreciate a face-to-face meeting, it’s no longer necessary and the online process is much faster. More specifically, a loan officer will send all necessary forms etc to the buyer and then submit this documentation to the institution.

Once the application has been assessed by an underwriter, the loan officer will then relay the final decision to the buyer. What’s more, a loan officer will then prepare further forms such as the closing documents for the loan.

Now, the above is a rather simple explanation in terms of what happens during a loan application. There’s much more to process than meets the eye and some loans are far more complex than others. For example, federal and state regulations require a large amount of documentation for each home loan. In this sense, a loan officer can be invaluable for simplifying matters and removing any uncertainty or even confusion at the same time. And in case you might be asking yourself, a loan officer will usually receive commission for their time and work.

As you can see, a loan officer is there to provide assistance and peace of mind to buyers. These representatives can advise on the best options to consider but also the right products that will suit the circumstances of every individual. Given the extent of paperwork and regulations involved, this makes the role of a loan officer invaluable to buyers who want to save time and hassle with their loan application.

If you have any questions at all about a loan officer and how they can help you with your next home loan or refinance, contact City Creek Mortgage today.

 

 

Is Refinancing Possible with Bad Credit?

Homeowners with a bad credit score will often worry about not being able to refinance their mortgage. However, bad credit doesn’t necessarily mean that you cannot refinance your mortgage and a sub-par rate is often the only price that homeowners will end up paying. 

But this makes sense, right? 

The truth is, most lenders are overloaded with requests for mortgage refinance. With the global economy in such a precarious position, these lenders have also needed to tighten up their standards and requirements. In other words, it’s true that lenders prefer to focus on those with good credit as these homeowners pose a much lesser risk in terms of repayments.

How to Get Mortgage Refinance Approval with Bad Credit

When it comes to bad credit, it’s important to shop around for the right lender. Some may not be willing to work with bad credit but certain lenders will talk with you at the very least. 

For most institutions, they want to see a credit score above 700. However, some lenders will accept credit scores in the 600s and government backed loans are by far the easiest to obtain. In case you might be asking yourself, you can simply contact your credit card company to check this score or create a free account on Credit Karma.

You should also know that some lenders don’t even require a particular credit score and set their own guidelines accordingly. For instance, it’s often possible to refinance your mortgage by adding a cosigner that will provide the lender with some added protection.

And then there’s another question; should you try for mortgage refinance and is it worth it?

Is Mortgage Refinance Worth the Effort?

It’s not easy to answer this question without a proper assessment but individuals with bad credit are likely to have higher interest levels. In this regard, it may not be worthwhile to pursue mortgage refinancing and even with low interest rates, you will still be paying more interest over the long term for any such arrangement.

As for how you can make this decision, it’s worth deciding things like whether you want a lower monthly payment or a different term for the loan. You will also want to ensure that you have secure employment in the long term and one that will allow for future payments.

Final Thoughts

It’s possible to improve your credit score by reducing debt, paying bills on time and taking better care of your finances. Also opting for a mortgage refinance deal is often a smart way to reduce your interest and save money to put toward other debt. However, the cost can be high for those with bad credit so it’s necessary to do the math before going ahead with any offers.

In conclusion, you can certainly obtain mortgage refinance with bad credit but you might want to seek professional advice in terms of whether you should or not. Call City Creek Mortgage today to talk to one of our salary-based loan officers.

Good morning,

 

We have great news in the housing market this morning. The pending homes sales report showed an 8.8% increase from the prior month. This is the highest month over month gain that we have seen since this measurement started around 20 years ago. This is all happening at the same time that we are seeing housing inventory plummet to near an all-time low. This paired with the chance that mortgage rates remain low will result in large home appreciation in the future.

 

The job creations report came in a little higher than expected. This is awesome news; however, we are still about 11 million jobs short from where we were pre-COVID.

 

Stocks are up this morning after the debate (or whatever you would like to call it) last night. Mortgage backed securities are down today after hitting a ceiling of resistance. We are still well above our double floor but have a good amount of room to fall before the floor. We are holding a strong locking bias.

Buying a home is often a long process and this is certainly true when you might have delays relating to applying for a home loan. While you might want “as much home as possible”, it’s important to remember that your credit score is there for a reason. In other words, it always serves better to be realistic with your budget and you shouldn’t want a home loan that you simply cannot afford.

In this article, we try to keep things realistic and help you get to the bottom of how much home you can really afford, while keeping an eye on the monthly payments:

 

How Much Home You Can Afford at a Glance

As a rule, you can calculate how much home you can afford by using the 36% calculation. This rule essentially means that your total monthly debt and projected payments, taxes etc should never exceed 28% of your gross or pretax income.

This monthly debt should include all expenses including credit card debt, student loans or car notes. It also makes sense to keep this percentage in mind, for you want to be able to afford whatever mortgage payments are coming your way.

Another way to approach your budget is to ensure that you have three months of total costs and debts in reserve. In this sense, if anything goes wrong during the loan, you will always have a fund on which you can fall back on in times of emergency.

 

How Lenders Will Determine Your Monthly Line of Credit 

Mortgage lenders have a series of ratios which they use to determine your eligibility for a home loan. Each lender has a different set of ratios, but they are mostly within the same range. If your monthly mortgage payment does not exceed 28% of your monthly gross income, they can quickly determine how much home you can afford as follows:

  If you have an annual salary of $100,000, the mortgage payment should not exceed $2,333. This is 28% of the combined monthly income. 

Another way to calculate this figure is to ensure the total housing payments including insurance, taxes and mortgage payments is not above 32% of the total gross income. And finally, lenders will sometimes use the “rule of 40” which increases this figure to 40% which makes it much harder to acquire a large line of credit for your home loan. It also means that if you have an existing loan or lots of debt, you won’t be able to afford as much for your monthly mortgage payments.

  

Final Thoughts

 It’s true, buying a home is often delayed by the home loan process and this is certainly true when the borrower has a poor credit score. In terms of how to improve your chances of affording more home, the only way is to reduce debt and increase income. In fact, many lenders will often refuse to lend any amount of credit for a home loan until the borrower has eliminated all of their existing debt. To learn more about how much home you can afford, contact a salary-based loan officer at City Creek Mortgage today.

What Role Does a Prequalification Letter Play When Buying a New Home?

While some might wonder how important a prequalification letter is, sellers’ ask for this letter by mistake. It’s true, a prequalification letter is not concrete approval but it at least lets the seller know that a lender is willing to loan a certain amount to the respective borrower.

But what else should you know about a prequalification letter? 

 

What is a Prequalification Letter? 

 

A prequalification letter is a document that confirms a lender is willing to lend you up to a certain amount. This is a tentative offer based on certain stipulations and not a guaranteed offer which is why some might say the document “doesn’t really mean anything”! 

However, this document is certainly the closest thing you will ever get to concrete approval. What’s more, a lender will carry out an investigation before issuing this letter which at least suggests there should be no major obstacles once other areas of a sale have been sorted.

With this in mind, a prequalification letter is always taken into account at the very least

The Role of a Prequalification Letter When Buying a New Home 

 

If for nothing else, a prequalification letter is a document that shows the realtor or seller that you are serious about buying the home. It includes such information as the loan type or program, the loan amount and purchase price, and the expiry of the pre-approval letter. 

While this prequalification letter is not guaranteed, it’s the best peace of mind for sellers and something that will certainly ensure your bid is taken seriously. It’s also a great sign of confidence from your lender and an indication that your probability of receiving a loan for the stated amount is very high. 

Receiving a Prequalification Letter from Your Lender 

 

It’s worth asking your lender questions about the process and anything along the way that they think might hinder your chances of official approval. At the same time, you can only apply and leave this decision in the hands of your lender. During this time, a lender will check your credit score and basic circumstances, and then issue a prequalification letter for 30 or 60 days. That is to say, this letter has an expiry date and every letter has a different time frame.

As part of the application process, you will also need to provide a set list of documents. You can ask your lender ahead of time for this list in order to save time on waiting for approval.

Final Thoughts

 

Buying a home is a process that consists of much uncertainty but a prequalification letter can remove many questions from the mind of a realtor or seller. Similarly, this is one less thing for you to worry about and when it comes to the application, you should find this letter will not only expedite the process but also improve your chances of buying the actual home. To learn more about prequalification letters or to obtain one, contact a salary-based loan officer at City Creek Mortgage today.

Saving for a down payment is always a good idea but not always an option for home buyers that want to get on the property ladder sooner rather than later. It’s also challenging to save at a time when the cost of living is so high and rent seems like a rather pointless expense when you might be ready and able to buy your own home. 

But how can you purchase a home with no money down?

Zero-money down mortgages were made available in the wake of the subprime crisis for low income households and people with lower credit scores. Let’s take a look at the two programs you might consider for a home purchase with no money down payment.

Zero-Money-Down Mortgages (Government Backed Loan)

Zero-down mortgages are government backed loans from commercial lenders. Select individuals can apply for these loans with a sufficient income and credit rating, not to mention documentation to support the application. Just so you know, the federal government commits to covering the cost of any repayments should the buyer stop paying back the mortgage. 

While this option is not readily available like it was during the financial crisis, this option allows lenders to assist borrowers that might have a somewhat riskier finance or credit profile. More importantly, these loans can sometimes allow applicants with a high credit score (620+) to purchase a home with no money down payment. Needless to say, not everyone has such an impressive credit score and this is precisely where VA and USDA loans come into play…

 

Home Purchase with VA Loans and USDA Loans 

 

VA Loans (Veteran Affairs Loans )

VA loans are available to military veterans and families and this insurance program usually covers up to $420,000. Mortgage insurance can be wrapped into the loan and no down payment is required. In order to qualify for a VA loan, proof of military service is required and a debt-to-income ratio of 41% is standard. However, qualifications of a VA loan change from one lender to the next. 

USDA Loans (US Department of Agriculture)

People in specific regions of the United States may be eligible to apply for a USDA loan. These loans are mostly intended for designated remote areas but some residents living close to small towns might still be eligible for the program. As part of the application process, you must also fall within certain thresholds as the loans are designed for low-income households. You must also have a credit score in excess of 600 points but no down payment is required for this option. 

Should You Purchase a Home with No Money Down? 

Home purchase with no money down payment will mean higher interest rates and the fact that you do not own any of the home outright. However, saving for a down payment is a major hurdle and one that can take years to achieve. With this in mind, a home purchase with no money down is never easy but the above options provide a starting point for buyers that want to get started, regardless of their financial circumstances. 

To learn more about no-money down loans, call City Creek Mortgage and speak with one of our salary-based loan officers.

The Federal Housing Finance Agency announced an additional fee for refinances on Wednesday August 12th. The new fee applies to refinances and is 0.5% of the loan amount. Fannie Mae and Freddie Mac have also announced they will implement this new fee.

Unfortunately, this is something we have no control over.

That means an additional $500 for every $100,000 borrowed.

Loan Amount Additional Fee*
$200,000 $1,000
$300,000 $1,500
$400,000 $2,000

*This fee may be reflected in higher rates, or higher fees, or some combination.

Lenders could potentially ease some of the burden on homeowners hoping to refinance, but what will happen is yet to be seen.

Sources: Bloomberg, CNBC