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.

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.

The ABC’s of Mortgage Loans

When you are seriously shopping around for a house and mortgage company, you will probably begin to feel a bit overwhelmed. 

There are just too many types of mortgage loans out there. At Indigo Mortgage, we like to make sure you make the most informed decisions possible while shopping.

That’s why today we are going to talk about three of the best loans out there. They are common, relatively easy to get, and all around have the best interests of the customer in mind. So, what are these three loan types and where do they come from? 

Assumable Mortgage

Typically, when you go to buy a home, you have to shop around for a mortgage and so on and so forth. The Assumable Mortgage process skips all that and allows you to take over the previous owner’s mortgage loan.

There are a few things to keep in mind with this type of mortgage. Sure, you only have to pay off what they have left and, while that can be a very good thing, you could also get locked into a bad interest rate among other things.

Also, the assumable mortgage requires that you get approval from mortgage lender. Mainly, as a buyer, you should only really be interested in this type of mortgage if the interest rates have risen as you will get to jump in on the lower rates that come with the Assumable Mortgage, which will save you money.

Balloon Mortgage

The Balloon Mortgage is appropriately named. In the beginning, you will have a much lower interest rate than others, but after about 10 years (the time can be shorter as it is decided in the agreement), you will find that the rates could very well spike.

So, like a balloon that rises until it pops and falls, your best bet with the Balloon Mortgage is to pay off the loan before the interest rate increases.

Conventional Mortgage

Finally, we have the conventional loan. This is one that is not insured by the government. However, as long as you work with a reputable company like Indigo Mortgage, you will be fine. 

When looking for a lender, it is important to never deal with Internet-based mortgage companies. Instead, it is important to partner with a lender that has a physical office where you can interact and get to know who you are doing business with when it comes to your Conventional Mortgage. 

New Survey Suggests Interest Rates on the Rise

The past half a dozen years or so have been fairly hectic in the mortgage world and with the economy the way it has been, that comes as no surprise. What else comes as no surprise is a surprise in the mortgage world.

With changes always occurring and nothing ever quite being the same, we believe it is important to keep home buyers and home owners on top of all the changes, including those involving interest rates.

What Freddie Says

Recently, Freddie Mac Homes published a very interesting article, displaying survey results on mortgages everywhere, including the Albuquerque area. The survey has concluded what some of you may have already noticed and that is that mortgage interest rates are on the rise.

However, while on their way towards peaking as a recent high, the rates are still at an all-time low, continuing what can definitely be considered a buyers-market.

What Changed?

There is whole lot of talk about change going around these days, so what has changed in the housing markets and why did it catch Freddie Mac’s eyes as well as our own? At the end of October, interest rates were at an average of 3.41%, which was up from the previous week that stood at 3.37%.

This was the average rate for a 30-year home loan. So the rates raised a mere fraction and still stayed at these record lows. So what is the big deal? The fact that the rate rose at all is actually a step in the right direction for the economy.

Other rises in mortgage rates included the 15-year home loan rate, which was up from its 2.77% rate and the previous 2.66% rate. Both the 5-year treasury index adjustable rate mortgage loan and its one-year counterpart saw little to no change though technically the 5-year went down a point.

A Reality Check

With interest rates mostly showing a rise, you may be thinking that it is no good news for you, but when you think about it, to have below 3% rates on 30-year loans would mean that our nation’s economy would be worse off than it is now and that would mean fewer jobs and all kinds of economic negativity.

At Indigo Mortgage, we believe in getting people the lowest achievable interest rates for their financial situation. While in this buyer’s market it has been easier to get lower rates than usual, a turn in the economy for the better is worth a rise in interest rates. Certainly, these interest rates are still low and provide entrance for new home buyers or can help others refinance their loan! Ask us how!

Posted by Indigo Mortgage at 6:24 PM No comments:

 

Determining Loan Rates: A Guide on How Mortgage Lenders Determine Interest Rates

Earlier this month, we talked about why it is never a good idea to work with an Internet lender or even a company that is not local to you. 

We pointed out the hazards and how it’s actually better for the local economy when you keep your business dealings local.

We also noted how many people look for out of town businesses and use online lenders because of ‘specials’ and ‘guaranteed low rate.’ 

However, what we found was that no company could actually guarantee you a rate without first going over your financials, credit history, etc.

This blog post delves further into interest rates for mortgages and how mortgage lenders determine interest rates.

Interest Rates Explained

In truth, a lender really can’t know what your interest rate will be until they determine them through a multiple-step process. It goes like this: if you walk into a lender and just blatantly ask for the going rate, they cannot know the answer to that without first getting a bit of information from you. 

If they tell you otherwise or try to guarantee you a low mortgage interest rate, then you can expect to be hit with a number of various fees that don’t actually exist.

The information necessary to determine your interest rates consists of a few personal things like finances, credit score, and current job. For instance, the FICO score really has become the deciding factor with mortgage interest rates. 

What is a good FICO score? Essentially, the higher the score, the better chance you have in getting offered a low mortgage interest rate.

The FICO score may pay a large role in the rate that you end up with, but there are other things to factor in. The type of loan you get, for instance will affect your interest rate. 

A jumbo loan, which is a home loan for a house priced of or over $417,000, will raise your mortgage interest rate.  This is because the amount of the loan is larger as is the risk for the mortgage company providing you with that loan.

Another variable that can greatly affect your mortgage rate is the length of time you plan on having the loan. The longer the loan, the higher the rate will be. This is because you are taking a longer amount of time to pay back a large sum of money that the lender essentially stuck their neck out for you over.

In all actuality, it is all about determining the risk involved in providing you with a mortgage loan. Once the risk has been determined and assessed, an interest rate can be determined for you.

At Indigo Mortgage, we will always work to get you the very best rate, but we will never guarantee the lowest rate the minute you walk through the door. 

Our philosophy is honesty and integrity, and no one cares more about getting you the right loan – and interest rate – as we do!

Posted by Indigo Mortgage at 12:12 PM 3 comments:

 

Finding a Mortgage Lender

Monday, October 22, 2012

If you are looking for a mortgage broker, then chances are you have searched them up on Google or Bing or on some other search engine. 

It might have included various help and review sites written up by people just like you, different mortgage lending websites and Internet lenders promising the lowest possible rates. 

If you haven’t guessed it, we are going to talk about that last one and why it can be a terrible financial decision to not deal with a mortgage lender face to face.

Internet Lenders and their Hazards

Let’s clear the air on this real quick – no mortgage lender can guarantee a low rate. There are simply far too many variables to factor in and it is impossible for them to just give you that coveted 3% interest rate. 

Sounds like false advertising? Technically it’s not; they often can get you a fairly low rate however though. With that rate comes a whole bunch of fees that really are just made up.

Don’t get hit with hidden fees that pop up at the last second. Be smart and don’t deal with online mortgage lenders. It’s not just the fees though; online lenders could scam you among other things. Just remember that it is always safest to work face to face with a local lender.

The Facts

The facts in mortgage lending are that there is a process needed to be conducted to determine your eligibility for a rate. 

It’s not just some company guarantee it all depends on what you want, your financials, how long you will take to pay it back, etc. The variables that serve as the deciding factors for your interest rate include:

•        FICO scores must be above 740 for a borrower to qualify for that envied lower interest rate.
•          Loan term lengths also adjust the determined rates; longer loans mean higher rates.
•          A jumbo loan will also increase your rates.
•          If the risk is determined to be high by the lender, then they are going to raise the rates too.
•          Mortgages vary and so do their perspective rates.
•          Rental properties raise the rate.
•        Locking in your term will also alter the rate.

These are the key variables that are all required when determining your available interest rate. At Indigo Mortgage, we always recommend that you work face to face with your local lender. 

We like to know who are customers are and you should also likewise know who you are working with to secure the best mortgage loan and lowest interest rate for you.

Posted by Indigo Mortgage at 4:07 PM No comments:

The Good, the Bad, and the Ugly of Mortgage Interest Rates Dropping Below 3%

Recently, the Federal Reserve has begun to go through with their latest and greatest stimulus plan to help flip this economy right side up. The strategy has included lowering the interest rates to record lows. 

This blog post covers the good, the bad, and the ugly of this kind of strategy to help you, as a home buyer or home owner, to decide what is best for you.

The Good

The Quantitative Easing 3 is being applied and used to buy up mortgage bank securities to help in the effort of saving our economy. Their plan seems to be to buyout $40 billion in mortgage bank securities a month, but here is the kicker.

They have yet to set any real boundary or ‘end date’ to this effort. In fact, they may very well go on buying up these mortgage bank securities forever. The Federal Reserve has made it clear that they will only halt the process of Quantitative Easing 3 if there is a drastic improvement in the economy and labor force.

The Bad

Okay, so lower mortgage rates couldn’t possibly be a bad thing, right? For starters, rates are already at a historical and record breaking low. We have never been in such a buyer’s market before.

Sure, this does make things easier on the consumer and if the rates go a little lower (which they have), it’s even better, right? All of this is true, so what is bad about this whole thing?

The bad is what could come and it definitely leads to something disastrous and ugly. We will start by letting you all know that the rumors of below 3% interest rates on a 30-year loan are really just rumors. It could happen, but it wouldn’t be for a couple years and what causes it would likely be a catastrophic hit on our economy or the collapse of a super power.  

The Ugly

Everyone loves a deal, but there is a reason that unless your favorite clothing brand is going out of business you will probably never see something marked down at 90% off. So, why is this?

Profit, pure and simple, so when you start seeing record low mortgage rates getting lowered after you jump for joy on the savings you might stop to think how are they doing this? That is where the problem is -- over the next few years if the economy doesn’t improve, the rates will continue to lower and further sink the ship.

What it means

This means that caution is the operative word. It also means that it is a good time to jump into a home.

At Indigo Mortgage, we believe in the facts, we know everyone wants in their dream house, and we want to help make that happen, but you have to know what you are getting into and prepare by being informed. Let us help you! 

Posted by Indigo Mortgage at 3:48 PM 2 comments: