City Creek Mortgage News

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

Choosing a home lender can be an intimidating process, especially for first-time buyers. However, the same hallmarks can be found with the most reliable lenders and basic research such as comparing rates is the key to finding the best possible home lender.

 

At the same time, you need to pick out a lender that can provide you with a loan to match your criteria. After all, you will be paying back this loan for many years to come and the last thing you want is a loan which is not designed to meet your future needs.

 

In this article, we consider what you should know about choosing the best home lender for you. 

 

What You Should Know Before Choosing a Home Lender 

The truth is, not all mortgage products or home lenders are created equal. Some lenders will have stricter guidelines than others, and some institutions require as little as 3% of the purchase price in terms of the down payment. What’s more, some lenders insist on an immaculate credit score, while others focus on borrowers that might not have the most impressive credit profile.

 

As for the types of mortgages, you will find six main types of mortgage with USDA loans and VA loans being the most common alternative to a conventional mortgage. Just so you know, USDA and VA loans refer to zero-down payment loans which the federal government guarantees for individuals that meet a very specific eligibility criteria. When it comes to conventional loans, most home buyers choose between an adjustable rate mortgage (ARM) and a fixed-rate mortgage.

 

Adjustable mortgages have a fixed rate at the beginning but this rate will fluctuate according to market conditions after a specified number of years. ARMs are considered riskier in this regard as some buyers may not be able to keep up with the payments when this happens. However, ARMs have a lower rate of interest in the first few years which means they are often more suitable for buyers that wish to refinance before the initial loan has reset. Meanwhile, fixed rate mortgages have a set time frame and monthly payment. While the monthly payments are higher, the loan can be paid-off much faster.

 

Either way, before you proceed with a home lender, it’s important to crunch the numbers and know the best type of mortgage to suit your circumstances.

 

5 Quick Steps to Choosing a Home Lender

You will find many institutions operating in the home lending industry but not every organization will be able to help you. For instance, Mutual Savings Banks are “thrift” institutions that focus on assisting individuals in the local community and Correspondent leaders are loan companies which rely on bigger lenders. Meanwhile, mortgage bankers package loans for specific financial companies and credit unions can also help members with sizable loans and competitive interest rates.

 

Here’s a quick guide to picking a home lender that will suit your needs:

 

  1. Know the Score – Check your credit score before you do anything. It’s important to know where you stand before approaching a home lender for advice or assistance.

 

  1. Check Registration – Check the license registry to ensure each lender is fully registered in your state.

 

  1. Compare Rates – Request quotations from as many mortgage lenders as possible and compare rates at the very least. Remember that finding the cheapest lender is not the aim but price certainly matters. Use this research as leverage to acquire a better price.

 

  1. Consult Friends/Family – It’s not a guarantee but testimonials are often helpful for finding a decent home lender. As friends and family, and check online reviews for first hand feedback.

 

  1. Ask the Right Questions – Ask as many questions as you possibly can. What is the turnaround time for approval? What commission, points or lender fees will you need to pay upon closing? Can these fees be rolled into your mortgage? What is the requirement for down payment?

 

As you can see, finding a suitable home lender is all about research. It’s best to start this process long before you even think about making any offers on a home and this will also help with speeding up the actual buying process. After that, comparing rates is the first step toward choosing the best institution and product, and taking your first steps toward owning your very own home.

To learn more about mortgage rates, call City Creek Mortgage and speak with one of our salary-based loan officers.

If you worry that rates might rise between the closing date and time of application, you might be thinking about locking the interest rate on your home loan. It’s important to pay close attention to this rate because even the smallest rise in percentage can result in thousands of dollars in interest.

That is to say, you can potentially pay less by locking your interest rate on your home loan. In fact, if you get the timing right, this interest lock might save you many thousands of dollars at the very least!

But what is a rate lock exactly?

Understanding the Rate Lock on Your Home Loan 

A rate lock refers to an option in which you can freeze the interest rate on your home loan. Your lender will essentially guarantee this rate until the end of a specific period. With a lock in place, this simply means that you also don’t need to worry about any fluctuation in the interest rate of your loan.

Interest rate locks last for up to three months or more but this is entirely dependent on your lenders conditions. It might also be free but then some lenders change a fee for this rate lock and further fees for longer periods.

Now, let’s consider the best time to lock the interest rate.

The Best Time to Lock the Interest Rate on your Home Loan 

You will almost always need to wait until the loan period is finished to request a rate lock on your home loan. For this reason, many homeowners have no option but to wait but then there’s also the risk of locking an interest rate too early. That is to say, if you request a rate lock too soon, you might miss out on an even better rate lock a short time later. At the same time, if you wait too long, you might also miss out on a more favorable rate lock in the near term.

A rate lock is usually more expensive when the period of time is longer. For example, a 60-day rate lock is more expensive than a 30-day rate lock, while a 120 day rate lock is even higher. With this in mind, it’s always a good idea to ask your lender for clarification about the rules and stipulations for a rate lock.

According to many experts, provided you are okay financially, it’s usually best to lock this rate as soon as possible. It’s a reasonably fast process but the idea for locking the rate quickly is that this is historically the best option.

Final Thoughts

Every circumstance is different but a rate lock can end up saving you thousands of dollars on your home loan. It’s also a very quick process and one that many experts insist should happen as soon as possible. At the same time, it’s best to ask your lender for clarification around the rules and when it comes to timing a rate lock, there’s really no viable way to enact perfect timing. To learn more about locking your interest rate and the pros and cons to waiting, contact a salary-based loan officer at City Creek Mortgage today.