Seven Things Your Agent Should Know About Your Mortgage Approval

Most experienced real-estate agents are aware about all the nitty-gritty’s of the mortgage loan approval process, but there are certain vital details that tend to get overlooked. Eventually, these can result in a delay or denial of the purchase. Some of the aspects that can undergo a change, and can impact your home loan financing are:

  • New regulation

  • Appraisal guidelines

  • Updated disclosures

  • Mortgage rate pricing-premiums

  • Credit score or bad credit rules

  • Rescission deadlines

  • HOA insurance requirements

  • Secondary approval layering

  • Property type

  • Title

  • Property flip rules

  • Others

Seven Important Things

The current-day lending environment is highly volatile and it is crucial for home-buyers to obtain a full mortgage loan approval that very clearly defines all the contingencies related to an individual home buyer’s situation. Ideally, these are the things you should be looking at before you spend time looking for new home with your real estate agent. These are the things your agent should always keep in view while you are being shown new properties, which will help in easy mortgage approval:

  • Property Type- High-Rise, Town House, Condo, Single Family Residence, Shoe House or Dome Home

  • Residence Type- Understanding whether you have to sell your 1st home before buying another
  • Mortgage Rates / Lock-in- Typically, mortgage rates have a 30-day lock-in period. If you are looking for a new mortgage rate, you will have to switch to a new mortgage lender

  • Headline News or Employment- This relates to income security, periods of unemployment and job changes

  • Title or Property Flip- If a property has been bought by an investor and then sold within 30-90 days of the purchase; it’s called a property flip. Some lenders have stringent rules around these kinds of transactions and will take this into consideration in the mortgage loan approval process

  • Homeowner’s Association Insurance- Certain lenders need that Condos & Town House communities have enough insurance & reserves coverage related to specific ratios on the units that are owner-occupied vs. rented ones

  • Appraisal Ordering Procedures- There are frequent changes to appraisal ordering guidelines as regulators implement numerous new consumer-protection laws created in an effort to prevent foreclosure epidemics in the future

Though there are a number of things that your agent will have to look into and keep in view, these 7 points are important to understand. And as a buyer, if you want easy mortgage approval, it becomes all the more important for you to be aware of these things too. Contact ResMac Home Loans for any other mortgage-related information you need.

 

Five Myths About Home Values

When the economy is booming and home values are on the rise, homeowners rarely question appraisals too much. But in times of recession, when property values are on the downtrend, most homeowners & listing agents tend to question & pick apart appraisals. But the actual appraisal process has not undergone much of a change since the boom and bust in the housing space that took place between 2001- 2009. Take a look at 5 topmost appraisal myths:

  • I have put in $15,000 into a property very recently- Why is the appraised value not higher than that?”

It’s a misconception that every improvement carried out in a property will add to its value. Even with significant cosmetic repairs, there are times when the property value may be comparable to a foreclosure right next door, rather than the value of a new home that is a block away. The electrical, air and heating are priority, square footage and the number of beds and baths comes next while genuine cosmetic upgrades are on the lowest rung of the home improvement ladder

  • My home is comparable to some properties right in the neighborhood- but it’s being valued at much less”

If a homeowner is planning on selling a house that has added $150k in upgrades to the flooring, built-in cabinets and the kitchen, it might be much more beneficial to show that property in magazine ads or in an open house. The fact is that the homeowner might be stuck with a much lower appraisal (even lower than comparable properties right across the street).

This happens because the appraisers always use properties from that same neighborhood to first establish a value. In simple words, the seller ended up over-improving their home for that specific neighborhood

  • I just invested $50,000 in a pool- why does that not count for anything?”

Professional landscaping and pools rarely ever see a value-add that matches up exactly to the amount that has been spent on that improvement. This value is also largely based on the comparable sales in a particular neighborhood.

  • How can very similar homes a particular neighborhood appraise for vastly different values?”

This is a very common question that crops up for older neighborhoods where there may be drastic price differences for homes that are modeled similarly. Square footage and additional rooms might be the primary reason for a particular property appraising much higher than another.

When an appraiser determines the value of a property, the size, square footage, improvements, location, neighborhood amenities and market trends are taken into account. Contact ResMac home Loans, to understand more about how an appraisal works.

 

Important Factors To Consider When Getting Financing On A Foreclosure, Short Sale or New Construction

There are a number of foreclosures and short sales in the market and when you are planning on buying a home, they may present a lot of value. But there are certain problems associated with them that homeowners should be aware of before applying for foreclosure sale financing:

  • Property Condition- Homeowners who are facing a foreclosure or want to short sell their house generally do not have the money to maintain the property well or pay for the mortgage. This can cause problems for you, if you are planning on getting an FHA loan. These require that the property should be ready to move into

  • Timing Challenges- Typically, a short sale process has very awkward timeframes for approval of the purchase contract and loan closing. Every bank has different rules; however the approval can take 7-120 days. Since there is no fixed timeframe for approval of a short sale, timing of the loan submission, rate locks & the closing can become very challenging. When you are buying a short-sale property, you should be prepared for loads of paperwork

  • New Construction- If you want to make use of FHA financing to buy new construction – there are a number of different issues that might crop up. You must have a CO- Certificate of Occupancy and if this is not available, you will not be able to go to the FHA and may have to opt for a renovation loan

  • Builder’s Certification- You might need a 10-year warranty, termite inspection, well test and septic inspection, when applicable while buying a home

  • Construction Permits- You will require specific documentation (in a certain combination), to satisfy the lender and the FHA. It is important that you work with a knowledgeable loan officer while buying any new construction with financing from the FHA

The Right Support

If you decide to use conventional Freddie Mac/ Fannie Mae financing you will still have some hurdles to navigate, but they will be a little less than the ones you encounter with the FHA. But the down payment will be higher and there are more stringent credit qualification guidelines.

Regardless of whether you plan on a FHA loan, renovation financing or conventional financing, it is crucial that you have a strong home-buying team who can help and support you through the negotiations and tons of paperwork. For more information on financing for foreclosures, contact ResMac Home Loans.