Shoppers and Well-Meaning Parents Beware of Credit

Many of us do not quite understand how the credit companies come up with a "magic credit score" that determines how much we can borrow and at what rate.   Moreover, borrowers do not realize how important it is to maintain that number in between the time the Loan Office issues that pre-approval letter and the time the borrowers close on their mortgage. 

I have had borrowers no longer qualify for a mortgage because they decided to charge all the furniture they need to buy for their new home.  They got caught up in the moment, not realizing there will be no place to set up all those new leather recliners and matching love seats after their credit score dropped below minimum number needed to qualify for their loan.  Another borrower forgot to mention they loaned their daughter an extra $3,000 for room and board at the beginning of the semester, which depleted one of their savings accounts.

All of these actions affect their creditworthiness.  When you are pre-approved for a mortgage, the approval process is based on a snapshot of your financial situation at that time.  Borrowers provided a bank statement that said they had $5,000 in their savings, which would cover all their closing costs.  After these well-meaning parents loaned their daughter college funds, they no longer have enough liquid assets to cover the out of pocket costs for closing.    The savvy shopper might have gotten a great deal on furniture, but the hidden cost was a decrease in her credit score.

Borrowers must remember to maintain and protect their credit at all cost.  You might feel like you are putting life on hold for a while, but getting the home of your dreams will be worth the short-term sacrifice. 

Are Pre-approvals still necessary in this housing market?

There seems to misconceptions about Pre-approvals. Are they necessary?  How much will they cost me?   Pre-approvals are an essential first step in the home buying process where borrowers provide proof of their income and assets, such as bank account statements, W2s, and pay stubs to a Loan Officer. Loan Officers then issue a pre-approval letter that will let buyers know how much house they can afford.  Pre-approvals take in account any additional closing and settlement costs, down payments, and potential out of pocket expenses so borrowers know how much the loan will cost them at the closing table as well as each subsequent month. While numerous online calculators give a general idea of how much a buyer can afford, they can never take the place of an actual Loan Officer that understands the underwriting process and how those assumptions and calculations can be used during the loan process.  There is no cost to the borrower to get a pre-approval.

Time is of the essence for most Real Estate agents and sellers.  Many of them require buyers to produce pre-approval letters before showing them a home. They do not want to spend their time and efforts on someone who cannot afford to buy their listing.   Buyers feels the same way when setting up showings and driving around to various Open Houses on the weekends.  Pre-approvals make sure both parties are on the same wavelength.  The pre-approval process can save borrowers valuable time, frustration, as well as some gas money! Pre-approvals are a win/win for everyone involved.   

Some Real Estate professionals might ask for next step up from a pre-approval, called a TBD (Property To Be Determined).    Lord Mortgage is able to provide a TBD which is a fully underwritten loan.  If borrowers want this level of buying power, they need to go through the underwriting process which is a more in-depth income and asset verification.   When Real Estate and sellers consider numerous offers on their listing, the fact someone has already received a pre-approval or TBD will definitely factor into their decision.  Remember, there is no-cost to get a pre-approval and it can actually end up paying dividends for time invested at the beginning of the home buying process. 

Time to Reconsider Home Ownership as Rents continue to Rise

You might have done the math a few years ago and decided it would be financially prudent to stay in your apartment until your next big raise.  Unfortunately, Zillow reports that the average renter spent $312 more in rent in 2014 than 2013.  “Over the past 14 years, rents have grown at twice the pace of income due to weak income growth, burgeoning rental demand, and insufficient growth in the supply of rental housing,” said Zillow Chief Economist Stan Humphries.  He also predicts that rents will rise even faster than home values, meaning another increase in total rent paid this year. 

With rents on the rise again, it might be the time to save up a down payment and make the switch.  Use this free Rent v Own online calculator to determine what is best for your situation: http://www.lordmortgage.com/#!rent-vs-own-calculator/coop

Low Mortgage Rates will help balance housing market 

~ and keep Spring home buyers happy 

March 24, 2015

Lower mortgage rates will help buyers looking for homes this Spring.  Despite all the 2014 news about surplus in homes for sale, Realtor.com reports that going into January, there were 9% fewer homes on the market than the year before.  In fact, Spring buyers are faced rising home pricing and decreased inventory.  However, the good news is lower mortgage rates will help offset some of those recent increases in house prices and keep the homebuyer affordability high.  Leonard Kiefer, the deputy chief economist at Freddie Mac, also predicts that mortgage rates will not be increasing much in 2015 and remains optimistic about the course of domestic U.S. economy over the next year.

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Low Rates Too Good to Last?

If you have been thinking about refinancing, it is the time to take action.  Many folks sit back and wait for "the best deal"  Rates are currently at two year lows, which means another chance to get the "best" deal for folks who missed the last refinance opportunity two years ago.  (and paid a lot of extra interest over those two years!)  How do you know you will benefit?  There is zero obligation to get a free rate quote from Lord Mortgage.  

 

Refinance boom started last week.  According to Mortgage Bankers Association's weekly survey, volume of refinance applications jumped 22% this week as compared to last week.  It means there was a 66% increase in applications and borrowers trying to lock in loans since last week. 

 

 

"We all know that at some point the Fed is going to raise rates," says Jim Sahnger, a mortgage planner for Schaffer Mortgage in Palm Beach Gardens, Florida. That could happen as early as the middle of the year or even next year, depending on what the Fed decides.

"For people who are sitting out there with rates over 5 percent, it makes sense for them to do something now," he says.

Stearns agrees that borrowers shouldn't try to time the market.

"When rates go down, it is very gradual," Stearns says. "When they go up, it's a blink of an eye. You never know when it is going to happen until it does."   Bankrate.com

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Mortgage Rates are at a TWO YEAR Low. Call 717-691-1450 to lock-in the Lowest Mortgage Rates in PA

Thinking about buying a home in 2015? You can start celebrating early!

Getting a mortgage is about to get easier. That's because Fannie Mae and Freddie Mac, the two government-backed residential finance giants that backstop a majority of all home loans, have put new lending guidelines in place that should make it easier for borrowers to secure loans. Moreover, with rents still rising, it is expected that many more will purchase their first home in 2015, especially if mortgage rates don't rise too quickly. The easing of credit standards are also expected to contribute positively to the market for first time buyers.

First time Home buyers - Look for new 3% down loan options from Lord Mortgage as soon as they become available.