Recently Zillow, an online real estate database, did a national survey and found there are myths that borrowers believe and things they just don’t know about mortgages. At Indigo Mortgage, we’ve found that most of these perceptions hold true in the local Albuquerque and Rio Rancho market as well.
The first item is that borrowers believe that when they get pre-approved for a home and that lender issues a pre-approval letter to the seller, the borrower must close their loan with that lender. This is untrue-- borrowers do not have to use the pre-approval lender and actually, it’s wise to shop that mortgage around.
The second misconception is that borrowers believe that the bank they do business will offer them the best rate. This again can prove costly to a borrower. It’s a good idea for a borrower to shop their mortgage around to find the best rate and terms, and not just turn to a single lender even if it’s a bank they have been with for years.
Here are some other statistics:
- 34% of prospective home buyers don’t know what the term APR means
- 50% of prospective home buyers don’t know mortgage rates change daily
- Millions of homeowners still don’t understand that the HARP loan program can help them refinance even if they owe more than the home is worth.
Of course, it’s really not the borrowers’ fault if they don’t understand. We always say, mortgages are very complicated and the landscape is always changing, so what’s true today may change tomorrow. That’s why it’s so important to use a local lender. someone you can meet face to face, and talk to the same person from one phone call to the next. With so many complexities in the mortgage business, out-of-state or national lenders do not always give the correct information to local borrowers. Local lenders are the best source of information to local borrowers.
At Indigo Mortgage, we’re happy to answer any question about mortgages. Contact us at 505-836-5700 or fill out our Quick Analysis on our website.
INDIGO Mortgage (505) 836-5700 Albuquerque's Premier Mortgage Loan Provider! We have five loan divisions to serve you. Select from Residential Loans, Commercial Loans, VA loans, Reverse Mortgage Loans or Construction Loans.
Wednesday, May 29, 2013
Friday, May 17, 2013
How Bank Statements Affect Your Mortgage Loan
It’s hard to image that bank statements can affect a mortgage loan, but they can.
Verifying a borrower’s assets usually involves checking and savings accounts. For example if a borrower’s application says the borrower has $2500 in their bank account as assets, then the lender wants to see two months of the most recent bank statements to verify that money. That sounds pretty easy to provide the statements showing the money-- but underwriters will dissect the statements and scrutinize all deposits. It’s the deposits they want to know about, not withdrawals.
Verifying a borrower’s assets usually involves checking and savings accounts. For example if a borrower’s application says the borrower has $2500 in their bank account as assets, then the lender wants to see two months of the most recent bank statements to verify that money. That sounds pretty easy to provide the statements showing the money-- but underwriters will dissect the statements and scrutinize all deposits. It’s the deposits they want to know about, not withdrawals.
In the recent past, underwriters wanted documentation and explanations for large deposits usually over $500 that were not from payroll or automatic payment such as Social Security or pensions. But in today’s lending environment, underwriters want explanations and documentation of all deposits, no matter how big or small.
This can be quite intrusive and frustrating for borrowers. The reason underwriters want verification is to reveal if the money in the account is legitimately theirs or if it was loaned or borrowed from relatives or from another lending institution. Either of those would alter either the debt ratio or would show that the borrower didn’t really have those assets.
To avoid some of that scrutiny, list assets for the loan qualification that are fairly stable in their deposit history. For example, use a savings account that is not very fluid or one that doesn’t show much activity, or a checking account that doesn’t have a lot of non-payroll deposits. For more information about how bank statements affect your loan qualification, contact Indigo Mortgage at 505-836-5700.
Indigo Mortgage is a locally owned and operated company, serving homebuyers in Albuquerque, Rio Rancho, Santa Fe and all across New Mexico. The company has five mortgage divisions for Residential, VA Loans, Reverse Mortgages, Construction and Commercial loans. Our mortgage broker and underwriters are certified by the National Mortgage Licensing System, NMLS # 239924.
To avoid some of that scrutiny, list assets for the loan qualification that are fairly stable in their deposit history. For example, use a savings account that is not very fluid or one that doesn’t show much activity, or a checking account that doesn’t have a lot of non-payroll deposits. For more information about how bank statements affect your loan qualification, contact Indigo Mortgage at 505-836-5700.
Indigo Mortgage is a locally owned and operated company, serving homebuyers in Albuquerque, Rio Rancho, Santa Fe and all across New Mexico. The company has five mortgage divisions for Residential, VA Loans, Reverse Mortgages, Construction and Commercial loans. Our mortgage broker and underwriters are certified by the National Mortgage Licensing System, NMLS # 239924.
Tuesday, May 7, 2013
Second Homes and Rental Properties
Borrowers wishing to purchase a 2nd home, a rental property or a non-owner occupied property will need to know what classifies homes as such.
The rule of thumb is a 2nd home is just that-- a 2nd home-- one that is not their primary home and where a homeowner will spend extensive time throughout each year but not rent it out. A 2nd home cannot be purchased in the same city as their primary home and must be at least 55 miles in distance from their primary residence.
A rental property or non-owner occupied property is a property that is within 55 miles of their primary or any property that will be used to generate income by renting it out. If a homeowner wishes to buy a home for kids or parents and not charge them rent, and that property is in the same city or less than 55 miles away, then it is still considered a rental property.
As a side note, the FHA will allow what is called a non-occupant co-borrower for people who wish to go on a loan in the same city with kids or relatives BUT all parties must qualify for credit and be on the loan. It important to classify the occupancy correctly as the down payment requirement is much higher and interest rates much higher for non-owner occupied properties.
Downsizing to a smaller home may be more difficult than you might think. When an underwriter sees that a buyer is purchasing a property less than 55 miles away and that is less expensive than what they are living in, they will automatically want to classify it as a rental. Even if the borrowers are truly downsizing, they must prove to the lender that they are indeed moving to a smaller home especially if they retain the larger property. It can be done but there are many hoops to jump through. For more information, please call Indigo Mortgage at 505-836-5700.
The rule of thumb is a 2nd home is just that-- a 2nd home-- one that is not their primary home and where a homeowner will spend extensive time throughout each year but not rent it out. A 2nd home cannot be purchased in the same city as their primary home and must be at least 55 miles in distance from their primary residence.
A rental property or non-owner occupied property is a property that is within 55 miles of their primary or any property that will be used to generate income by renting it out. If a homeowner wishes to buy a home for kids or parents and not charge them rent, and that property is in the same city or less than 55 miles away, then it is still considered a rental property.
As a side note, the FHA will allow what is called a non-occupant co-borrower for people who wish to go on a loan in the same city with kids or relatives BUT all parties must qualify for credit and be on the loan. It important to classify the occupancy correctly as the down payment requirement is much higher and interest rates much higher for non-owner occupied properties.
Downsizing to a smaller home may be more difficult than you might think. When an underwriter sees that a buyer is purchasing a property less than 55 miles away and that is less expensive than what they are living in, they will automatically want to classify it as a rental. Even if the borrowers are truly downsizing, they must prove to the lender that they are indeed moving to a smaller home especially if they retain the larger property. It can be done but there are many hoops to jump through. For more information, please call Indigo Mortgage at 505-836-5700.
Loan Types and Options
Mortgage rates continue to stay at historical lows. So far in 2013, we have seen a huge jump in purchase transactions. So it’s a good time to review the different options buyers have in today’s market.
By far the most beneficial loan program is the Veteran’s mortgage or the VA loan. The VA loan is the only true 100% purchase money mortgage today, meaning zero down for the veteran and it does not require mortgage insurance.
Then there’s the FHA loan which only requires 3.5% down of the purchase price but it does require monthly mortgage Insurance .
And of course there is the conventional mortgage loan which now only requires 3% down but there are credit score thresholds and this too requires mortgage insurance. The benefit of the conventional loan over an FHA loan is that the loan amount can go up to $417,000 while FHA is limited to just over $271,000. The VA mortgage will go to 417,000 with zero down.
Because the real estate market is very active, buyers need to act fast. Often they are up against a growing number of other buyers jumping into the market. So it’s imperative that buyers start the process with a mortgage lender like Indigo Mortgage so they are pre-qualified. Realtors today will not even begin to show properties to perspective buyers unless they have been pre-qualified. Indigo Mortgage will do the pre-qualification free of charge and in just a few minutes. This is a two-fold benefit as it shows sellers you are a serious buyer and it prepares the buyer to know exactly what the loan and payments will look like at a given purchase price.
By far the most beneficial loan program is the Veteran’s mortgage or the VA loan. The VA loan is the only true 100% purchase money mortgage today, meaning zero down for the veteran and it does not require mortgage insurance.
Then there’s the FHA loan which only requires 3.5% down of the purchase price but it does require monthly mortgage Insurance .
And of course there is the conventional mortgage loan which now only requires 3% down but there are credit score thresholds and this too requires mortgage insurance. The benefit of the conventional loan over an FHA loan is that the loan amount can go up to $417,000 while FHA is limited to just over $271,000. The VA mortgage will go to 417,000 with zero down.
Because the real estate market is very active, buyers need to act fast. Often they are up against a growing number of other buyers jumping into the market. So it’s imperative that buyers start the process with a mortgage lender like Indigo Mortgage so they are pre-qualified. Realtors today will not even begin to show properties to perspective buyers unless they have been pre-qualified. Indigo Mortgage will do the pre-qualification free of charge and in just a few minutes. This is a two-fold benefit as it shows sellers you are a serious buyer and it prepares the buyer to know exactly what the loan and payments will look like at a given purchase price.
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