Look Before You Leap: Understanding the Full Implications of Foreclosure

Before you take any action regarding allowing a home loan to go into foreclosure, you must know the full implications of this decision. There are strategies you should employ to determine your best course of action and you must be prepared for any fallout from allowing a default on your home loan.

Today’s homeowners are under ever-increasing pressure to make a decision on their home loan. Taking that first step starts with weighing all of your options to see if foreclosure is the best course for your particular situation.

Consider These Important Factors 

You need to evaluate some critical factors before just assuming that foreclosure is your only route. Ask yourself these questions:

• What is your current home’s worth? If you can sell the home for a profit or breakeven, then it does not make sense to allow your loan to go into default. The same is true if you have the resources to pay any differences from your sales net to your loan value.  The value you receive from having a satisfied loan on your credit report outweigh the cost of paying the loan in full.  

• Can you afford to maintain your loan? Carefully review your finances to see if you can afford your current mortgage with your present income. If you are continually dipping into your savings account or borrowing funds from friends and family to cover your mortgage, you might need to consider foreclosure. If you can continue paying on it without doing so, it could help you to hang onto it long enough for home values to rebound.
• What happens if I walk away from my current mortgage? Your immediate impact will be felt on your credit report. Foreclosures stay on your credit report for 7 to 10 years and can severely impact your ability to obtain credit. You need to take this into consideration as it can impact your ability to receive an automobile loan, rent an apartment, obtain a department store credit card, or even receive a job offer. You must also be aware that New Mexico law provides for a deficiency judgment. This occurs when a property is sold for less than what the loan amount is. The borrower can still be liable for the difference in amounts. There are exceptions to this rule; this is why it is strongly advised to seek the guidance of a knowledgeable real estate attorney before you commit to any action to protect yourself against liability and deficiency judgments.    

We’re Here to Help!

When a homeowner is faced with the dilemma of foreclosure and they are determining the best course of action, it is vital to take your unique circumstances into consideration before making a decision. Here, at Indigo Mortgage, we are loan specialists who are highly-skilled in assisting our customers with all of their loan needs.

Our philosophy is to serve you with the highest integrity, leveraging our faith-based approach to customer service and our overall operation.We would be happy to discuss your present financial situation with you to see if we could be of assistance. There are government loan programs available to assist homeowners underwater in their current loan. Give us call at 505.836.5700 to see if we can help. 

Posted by Indigo Mortgage at 9:52 AM 1 comment:

Paving the Way to Your Next Home Mortgage: Knowing the 3 C’s of Lending

Understanding what lenders look for in borrowers is imperative before attempting to obtain credit. There are guidelines lenders follow when determining a borrower’s creditworthiness. Knowing the criteria and preparing for them before you apply for a home loan or refinance can increase your chances for success.

Lenders use a strict guideline based on the 3 C’s principle: Capacity, Credit, and Collateral. These three factors are weighted and evaluated when determining your creditworthiness. Each “C” is important in its own right and understanding and knowing where you stand will help you determine how best to proceed.

Capacity

The term capacity in lending means what is the borrowers’ ability to repay their debt obligation. A lender will evaluate your time on the job. Typically, lenders will require a minimum two-year employment history. There will look at your tax returns and see if your income is on a W-2 or 1099.

The same is true if you are self-employed. They will factor in profit and loss statements to determine your final income. Lenders will also view your debt to income ratio (DTI). Simply put, this is how much debt do you have versus your income. This will include vehicle loans, student loans, and any credit card debit.

As an example, you and your spouse’s yearly gross income is $79,000 for a monthly gross of $6,583. Your mortgage payment will be $1,150, your car payment is $310, and your minimum credit card payments are $225. You do not include utilities and groceries. This gives you a monthly debt load of $1,685.

Now you divide the $1,685 by $6,583 and you will see your debt-to-income ratio is about 26%. Typically, lenders like to see your DTI under 38%. The lower your DTI ratio, the better candidate you are for a loan.

Credit  

This is where your home loan process begins. In order to qualify for a conventional loan with the best rates, borrowers must have a FICO score of 740 or higher. Borrowers seeking a VA or FHA loan need a FICO of 620 or higher in order to qualify. Your FICO is influenced and determined by a number of different factors.

Your FICO is based on your credit balances and unused credits available, how old your accounts are, your payment history and how many different accounts you have. Late payments -- even 10 days late -- can negatively impact your score. Potential borrowers should pay careful attention to due dates and total credit available to ensure small dings do not add up to pitfalls.

Collateral

The collateral you offer is the property being mortgaged. Lenders will scrutinize the property to ensure it is worth what the mortgage balance will be. Gone are the days when quick appraisals ruled and homes were not properly valued.

A thorough appraisal will be undertaken to protect the lenders interest. A home needs to be valued at the cost requested. 

Worth Their Weight in Gold

The world of underwriting is ruled by these three factors. Each component has equal bearing on whether you receive a home loan or refinance. If just one factor is outside the lenders guidelines, you will probably not qualify for a home loan or refinance.

Call Indigo Mortgage today at 505.836.5700 and speak to one of our lending professionals about a home loan or refinance.  

Posted by Indigo Mortgage at 12:38 PM 1 comment:

At the Ready: Documents You Should Bring to Your Home Loan Application Meeting

Being prepared and bringing the required documentation with you to your first meeting can go along way in making the home loan process go smoother. If you are a first-time homebuyer this process can be a little intimidating and for seasoned home buyers, sometimes we forget all that is involved in putting together a home loan package.

Be your own advocate and go over this checklist to ensure you have all the required documentation and are prepared to begin your home loan process.

The First Meeting

When you first meet with your home loan consultant, they will require certain documentation from you and your co-borrower (if applicable) to begin the process. Having the proper documentation is vital. Here are the items you should bring for each borrower at your initial meeting:

Income Verification: You should bring copies of your last two years of tax returns; two months of pay stubs; official documentation supporting any dividend income, interest income, child support, alimony, and any other sources of income. In addition, bring three months of bank statements. Include additional savings information from 401k accounts, money markets, stocks, and mutual funds. If you are self-employed, bring three years worth of tax returns and year-to-date profit and loss statement.

Employment Verification: Have the names, addresses, and telephone numbers of employers for the last ten years.

Address Verification: Supply the addresses you have lived at for the last ten years.

Identification Verification: Bring your original social security card(s), driver license(s), or state issued photo identification(s). 

Debt: Bring documentation supporting your current debt. This would include vehicle loans, credit card debt, personal loans and bank loans. If you have supporting information regarding debt you have paid in full, it is a good idea to bring it with you to the interview.

Additional Personal Information: If applicable, bring copies of your official divorce paperwork, official alimony documentation, green card and work permit. If you have ever filed for bankruptcy, bring copies of your discharge paperwork.  

Tying Up All the Loose Ends

This list will assist you in compiling the necessary documentation for beginning a home loan. Your friendly mortgage consultant will provide you will a list of any additional information you may need. Each loan (FHA, VA, Conventional, etc.) program has different requirements. Your mortgage consultant will give you specific details regarding any additional paperwork required.

Now is the Time 

With interest rates at a historical low, there is no better time than now to purchase a home. Contact us at 505.836.5700 to begin your home loan process today. 

Posted by Indigo Mortgage at 12:09 PM 1 comment:

Never Settle For Less than the Best in a Construction Loan

When you’re planning your dream home in New Mexico, one of the first items that need to be checked off your to-do list is securing a great construction loan that will take you from start to finish. A quality construction loan takes you step-by-step from the building process and finishes with a locked in affordable rate.

Blueprint for Success: Finding the Best Construction Lender in New Mexico

Knowing what to look for in construction loan will assist you in obtaining the best construction loan from the best lender. Be on the lookout for these items when selecting a construction loan:

A lender that gives you construction financing and let you convert your loan into a permanent one after construction is complete;

A lender that offers an interest only rate during the construction process. This can save you thousands of dollars in interest;

A lender that provides the flexibility of purchasing your land along with constructing your home or building. Oftentimes, lenders require you to own the land outright before offering construction financing;

A lender that delivers a simplified loan process with one-time only qualifying. This will save you time and needless paperwork;

A lender that uses a reasonable time frame to complete your project. Construction delays can cost you money and by having a flexible contract, you can concentrate on your project without worrying about deadlines;

A lender that has an impeccable track record. This goes without saying. When you are dealing with new construction on a home or commercial property, you have to be with a lender who upholds and adheres to high ethical standards lending; and

A lender that lets you float your rate before construction is completed. This can save you a tremendous amount of money if rates drop.

Builder’s Package

Searching for lender is not the only requirement for a construction loan. Your lender is going to need what is referred to as a builder’s package. A builder’s package comprises your builder’s resume and credit and banking history. There will be a breakdown of specifics costs and materials list as well as a line item cost sheet.

When you enter into a builder’s contract it should contain the following items:

·        There will be a clear outline describing the responsibilities of each party and their duties.  

·        There will be the scheduled start dates and completion dates for construction of the project.

·        Specific monetary amounts will be described that will be paid to the builder at each phase of construction. There should be guidelines regarding payment only under specific conditions are met, such as when you have received a signed inspection certificate.    

·        There will be assurance that your payment method is compatible with the line item cost breakdown.

·        There will be contingency provisions for changes in plans or construction specifications.

·        There will be proper identification of all parties within the contract.

·        If an architect is used during the construction phrase, their responsibility shall be defined.

·        There will be signatures for both the borrowers and contractor.

Let Indigo Mortgage Assist You with Your Construction Loan Needs

Our locally owned and operated mortgage company specializes in construction loans for those in New Mexico and the surrounding areas. Our expert team of lending professionals can assist you today in your construction loan needs. Contact us here or through our Albuquereque home office today!

Posted by Indigo Mortgage at 4:00 PM 1 comment: