mortgages

Mortgage closing costs are on the rise across the nation and are up 8.8% over the last twelve months. Origination and title fees on a $200,000 home loan average $4,070 nationally according to Bankrate Inc.’s 2011 Closing Costs Survey.

Banks are requiring extra employment verification and the like to keep loans in shape for Fannie Mae and Freddie Mac, and although these regulations “have been in place for a couple of years already, the mortgage industry takes them more seriously now. New forms and regulations that are still in discussion are influencing lenders already.”

Bankrate said, “On average, lenders charge about $1,614 in origination fees this year, up 10.3 percent from last year. Origination fees include lender charges for services, such as underwriting and processing.”

“Interest rates get a lot of attention, and rightfully so, but it’s also important for consumers to compare lender fees when shopping for a loan,” said Greg McBride, CFA, senior financial analyst for Bankrate Inc.

Is lending passing on a cost that should have been built in to start with? What do you think of the rising closing costs? Click the comment link below to sound off.

Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.

Do you see trouble ahead for making your mortgage payments? Here are some things to do now to make it through…

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Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.

Before a buyer even begins to look at homes, it is critical to know if they qualify for a mortgage, and how much of a loan they qualify for. There are several proactive steps that can be taken in order to prepare for getting approved for a mortgage. If followed, these tips will successfully guide you to realizing the dream of homeownership.

Even though you will need to meet your loan officer in person, there are steps to take to prepare yourself ahead of time. You may need to fill out an online application, or you may be asked to begin an application over the phone. Documentation will need to be submitted to the loan officer either in person, by email, fax, or mail. The loan officer will request documentation and items such as tax returns for the past several years, pay stubs, bank statements, retirement or investment fund information. The loan officer will also review all your debts versus income to determine what is called your “debt to income” ratio (DTI).

In addition to calculating your DTI, the loan officer will review your credit history to ensure there are no defaults on previous loans, late payments, etc. Occassionally there are items which appear on the credit report that are mistakes or items that have indeed been paid off but are still being reflected. When this occurs, you will need to contact the creditor to make the correction. These problems will need to be addressed and cleared up before the lender will approve your mortgage.

With the above information, the loan officer will then be able to let you know whether or not you will most likely be approved for a loan. Final approval is issued after your loan application has been submitted to an underwriter. Depending on the outcome, you will then be able to either move forward with an immediate approval, or become aware of outstanding items that need to be corrected. It’s not unusual for a few sticking points to appear when applying for a mortgage. Some of these items may include:

  • Tracking down required documentation, such as tax returns, pay stubs, legal decrees
  • Creating a history of paying all bills on time
  • Finalizing a divorce or any other lawsuit
  • Waiting for a bankruptcy or foreclosure time frame

Although lenders are in the business to lend money, they want to make sure the borrower is going to pay back the money loaned; therefore they do require you meet their lending guidelines.

The best tips to prepare for getting approved for a mortgage are relatively simple: pay your bills on time, have a good employment history, maintain proper documentation, and make any repairs necessary on your credit report. A good loan officer will assist in guiding you through these steps so that when it comes time to move forward and begin searching for that perfect dream home, your financial picture will be in excellent condition, ready to be approved for a mortgage.

Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.

Should you keep paying your mortgage on a home that’s dwindling in value? No way, say an increasing number of underwater homeowners who are voluntarily choosing to “walk away” from their home loans, a practice known as “strategic default.”

Jon Maddux, CEO of YouWalkAway.com, reports 10% more clients this year to his company, which advises people how best to handle the walk away process.

Charles Gallagher, a real estate attorney in St. Petersburg, Fla., has also seen an uptick.

And a recent survey by home finance company Fannie Mae found that while only about 27% of homeowners would even consider walking away, that’s up from 15% last year.

In an early 2010 report, Morgan Stanley researchers said nearly 200,000 defaults in the prior year were voluntary, or roughly 12% of the total. The bank expects to issue updated estimates in coming weeks.

“People are more educated about the process,” said Maddux of YouWalkAway. “They’re making more calculated, less emotional, decisions and are less fearful and less concerned about the stigma.”

University of Arizona law professor Brent White thinks the past few years of banking scandals have reinforced the view that it’s not unethical to walk away.

“There’s a sense that the banks don’t follow the ‘rules,’ but somehow the little guy is supposed to — more and more people are saying ‘enough is enough’ and walking away,” said White, who is also the author of “Underwater Home: What Should You Do If You Owe More on Your Home than It’s Worth?”

Some homeowners, however, can’t get past the stigma.

What about you? How do you feel about people who are able to pay, but walking away? The comment link below is where you click to comment on this. We’d love to hear from you.

Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.

Getting a mortgage just keeps getting tougher, and many homebuyers are getting rejected for loans they could easily afford.

The issue: Tighter standards from Fannie Mae and Freddie Mac, the government entities that back mortgages made by banks.

A quarter of all mortgage loan applicants get denied for loans, according to the Federal Reserve. Many other potential homebuyers never even try to get loans.

Here are some of the reasons banks must turn down borrowers for mortgages:

Too few of the condos in your association have been sold

For Fannie/Freddie lenders to approve a mortgage to finance purchase of a condo, a large majority of the units — 70% — have to be already sold or under contract to individuals. Before 2009, the threshold was 51%.

If more than 30% are still owned by the company that built the complex or sponsored its conversion from rental units, the mortgage will be denied, no matter how qualified the buyer is.

Your debt is too high

Fannie and Freddie have also increased their emphasis on income relative to debt.

If someone’s total debt payments exceed 45% of income, the mortgage will be denied. In 2009, the limit was 55%.

Using that as a hard and fast rule can penalize very qualified buyers, ones who should be able to meet their debt obligations.

Take, for example, a couple who wants to buy a second home as a rental. Two mortgage payments could easily push them past the 45% threshold, even though they’ll have rental income and home equity.

The 45% rule can also hurt small business owners who have had a couple of bad years. Their incomes may be down relative to their debt, but they may have plenty of cash to keep from defaulting on a mortgage.

Missed payments on credit card debt

Fannie and Freddie also have gotten stricter in how they factor in missed payments on credit cards, auto loans and other debts in which the balances do not have to be paid off every month.

They used to be okay with a missed payment or two. Now, one missed payment will hit your debt-to-income ratio, because banks will add 5% of your outstanding loan balance to the debt part of the calculation.

That would be an extra $1,000 on a $20,000 student loan balance, for example.

The wait after foreclosure is extended to seven years from five

Some borrowers lost homes to foreclosure but then diligently rebuilt their financial health. Despite high credit scores, ample assets and income and steady employment, lenders are not allowed to finance their Fannie/Freddie mortgages if their foreclosures happened any time within the past seven years.

Before spring last year, the wait time was five years.

Of course, there may be other factors that cause a lender to deny you for a mortgage, but these are the basic deal-killers.

Talk to a lender and get pre-approved before even starting the home search process, and you may save yourself and your real estate agent a lot of wasted time if you’re not going to qualify any way.

Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.