Albuquerque Mortgage Misconceptions Match National Survey

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.

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.

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.

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.

Study Shows Lender Choice Influenced by Realtor

A new national study just released shows that nearly 50% of homebuyers make the decision on which lender to finance their purchase, using their realtor’s recommendation.

So instead of shopping around for a lender, homebuyers are influenced by their agent to use the lender of the realtor’s choice-- for better or for worse. Realtors want speed and reliability from a lender and usually establish relationships with lenders who offer both. The downside to that might be that the lender does not offer the lowest rates or the best terms for the borrower.

Just blindly going with the referred bank or lender clearly isn’t wise, because when it comes down to it, you really won’t know how competitive they are, unless you shop your loan elsewhere. Often times when a buyer makes an offer on a home, the real estate agent will ask them to get pre-approved with the recommended “preferred lender.” While it may be in your best interest to get the pre-approval to show you’re very serious about buying the property, the buyer doesn’t need to use that lender to obtain your financing. You can still shop that mortgage around for the best rates and terms. Now, we are not in the slightest saying not to use the realtor’s preferred lender, just to be prudent and get other quotes.

Using a mortgage broker like indigo Mortgage can mean the difference of a .25 to .5 % in the interest rate, which over the life of the mortgage, can save the borrower thousands of dollars. If it’s an FHA or VA loan, the borrower can also see a swing of several thousand dollars in lender-paid closing costs, again saving you money.

A mortgage broker has access to several different lenders so the buyers’ chance of getting the best rate and getting their loan closed is much greater. Remember, It’s actually best to start with a lender before even contacting a real estate agent or looking for homes because this way the borrower can be approved for a certain level of mortgage, and will have full knowledge of their loan before they make an offer. 

For questions about selecting a mortgage lender, contact Indigo Mortgage in Albuquerque at 505-836-5700. Indigo Mortgage offers five mortgage divisions including Residential, VA Loans, Reverse Mortgages, Construction and Commercial. They are licensed by the Nationwide Mortgage Licensing System (NMLS #239924), and can provide loans anywhere in New Mexico.

Mortgage Updates and Tips

Things in the mortgage industry are always changing! Today, we have a quick overview of some recent changes and enhancements and some tips. The first one that the “HARP-2” or Home Affordable Refinance Program was set to expire in December of this year but has now been extended until the end of 2015. This is due to the fact there are millions of borrowers who are eligible for the HARP-2 but still have not refinanced. That means that any homeowner who has not refinanced in the past several years should really reach out now and see if they can’t save substantially each month on their mortgage by refinancing.

Another big change is that FHA has increased their monthly and upfront mortgage insurance premiums again. This has made the mortgage insurance permanent for the life of the loan, no matter how low the loan-to-value gets. In other words, until that FHA loan is paid off from either selling or refinancing, the mortgage insurance is permanent.

Now, for a couple of tips. A recent trade magazine article states that using a mortgage broker in today’s mortgage environment carries some big advantages. First, a mortgage broker has access to many different lenders and most likely will find the lowest rate available on the market. Because mortgage brokers have access to many lenders, they can offer a wider range of underwriting guidelines. That means your chance of getting your loan done are much better, and likely at better rates than using a single-source lender. Most mortgage brokers are locally owned and operated, so you’re likely to also get better customer service.

And of course, Indigo Mortgage is a true mortgage broker right here in Albuquerque. Contact Indigo Mortgage at 505-836-5700 for any mortgage related questions. 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.

Study Lists Reasons Borrowers Not Utilizing HARP Refinances

April 9, 2013-- Albuquerque, New Mexico.

Fannie Mae just released a new study showing that many HARP -2 eligible borrowers have still not refinanced. The study wanted to know what has caused these borrowers to not take advantage of the HARP-2 program. The study found that perceived Costs, rigid loan terms, distrust of the lender or offer, and misperceptions about qualifying are the main reasons why people are not refinancing.

Along with those reasons, borrowers also said they don’t want to take out another 30 year loan; they feel they’ve been bombarded with mailers and offers; they still think their home has lost too much value; there is too much paperwork; and they do not like or trust their current servicer.

We’d like to address several of these issues. First, borrowers can still use the HARP to refinance into shorter terms and they do not have to take out just a 30 year loan-- they can do a 10, 15, 20 or 25 year term, which also would decrease the amount of interest paid during that loan.

At Indigo Mortgage, we realize that borrowers are sometimes inundated with offers and mailers so we try to be more of a resource. We can often answer many of their questions without even doing an application. Remember that a borrower does not have to return to their current lender to take advantage of the HARP refinance. As a matter of fact, these homeowners would be well served to shop their mortgage around before and review various offers in order to choose their new lender.

Indigo Mortgage has completed many HARP-2 refinances and we strive to make it as easy and seamless as possible to complete your refinance. If you have questions on a HARP refinance or for any other mortgage or refinance information, 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.