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What Are Conditional Approvals?

What Are Conditional Approvals?As you take a look at potential houses for sale, what does it mean if you see a house with a conditional approval? Does that mean you can swoop in and purchase the house with a better offer? Even though a conditional approval doesn’t mean that the sale is guaranteed to go through, it does mean that an agreement is in place.

An Overview Of A Conditional Approval

A conditional approval is an informal acknowledgement that an agreement is in place between a buyer and the lender; however, the lender typically has to collect additional financial information to show that the house is a solid buy. If this process falls through, the house may go back on the market. 

For example, the lender might require an appraisal before financing the house. If the appraisal comes in too low, then the buyer might have to bring additional cash to the table. Otherwise, the lender might refuse to finance the house, meaning that it will go back on the market. Or, the lender might require the buyer to submit additional financial information to show they can afford the home. If they cannot do so, the financing process might fall through.

Is A Conditional Approval The Same As A Pre-Approval?

Even though the terms are similar, they are not the same. A conditional approval is not the same as a pre-approval. The pre-approval process takes place very early in the mortgage application process. The pre-approval process is important because it gives the seller some confidence that the buyer can afford the house; however, a conditional approval process is more formal and takes place much further along in the application process.

What Is Required For A Lender’s Conditional Approval?

The conditional approval is only granted after the applicant has submitted an offer on a property. Some of the documents that the buyer might have to submit include financial statements, income statements, tax returns, explanations of negative credit report items, and evidence of any debt or liabilities.

Once all this information is collected, the lender will decide whether to grant the buyer conditional approval. This could help the buyer lock in his or her agreement before proceeding with the other steps in the mortgage application process. 

 

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Using Your Equity To Buy Another House: What To Consider

Using Your Equity To Buy Another House: What To ConsiderBuying a home is a dream that many people want to make come true. At the same time, many people dream of buying a second home. Perhaps you are looking for a rental property. Maybe you are looking for a vacation home. Regardless, you might be wondering how you can come up with the necessary cash to finance this dream. You might even be thinking about tapping into the equity in your current home to make that happen. It could be your down payment for your second house, but what do you need to know?

How To Get A Home Equity Loan

If you want to take out a home equity loan for a second house, there are a few steps to follow. First, you need to figure out how much money you need. You need to take out enough money for the down payment and closing costs. Furthermore, you can only withdraw 85 percent of the equity in your home. If you don’t have enough equity in the home, you might not be allowed to take out a home equity loan. 

Remember that you will also need to go through the traditional oan application process. Your outstanding debt will be reviewed, and your credit report will be checked. You will also need to verify your income or assets to qualify for a second mortgage. The process is similar to your first loan.

Why Take Out A Home Equity Loan?

There are a few reasons why this might be a smart move for financing a second home. You can probably get a lower interest rate, and you don’t have any restrictions on how you can use the money. With a larger lump sum, you might also be a more competitive buyer in a hot market.

Before you take out a home equity loan, you should work with a professional who can help you find the best loan option to meet your needs. That way, you can compare the benefits and drawbacks of each option before making a decision on what is best for your purchase.

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How Your Home Equity Can Help You Reach Your Retirement Goals

How Your Home Equity Can Help You Reach Your Retirement GoalsIf you plan on retiring soon, you are probably looking at a few options that can get you over the hump. You are probably excited to start a new phase of life. With a record number of people closing in on their retirement age, many are starting to assess their resources to make sure they have enough money to last them for the rest of their lives. If you already own a home, you might be able to tap into your home equity to help you fuel your retirement.

Your Home Has Probably Gone Up In Value

Your house is an investment and now is your opportunity to capitalize on that investment. There is a great chance that the value of your home has significantly increased since you first bought it. Furthermore, if you have been in your house for a long time, your mortgage may have been completely paid off. This means that just about all of your home’s value could be yours to keep. Your house could be worth hundreds of thousands of dollars, which you can put towards your retirement.

How To Use Your Home Equity For Your Retirement

Of course, you still need a place to live, but there are ways for you to tap into your home equity for your retirement. If you have children who have already moved out, you might be ready to downsize. As a result, you could sell your house and use the cash from the sale of your house to purchase a smaller home. Then, you can use the money left over to fund your retirement. It might not be enough to cover your retirement completely, but it could be enough to get you over the hump if you are wondering when you can retire.

Consider The Implications Of Selling Your Home

When you sell your home, there is a chance that you may have to pay taxes on the capital gains stemming from the value of your home. On the other hand, you might be able to shield some of those gains if you use the money to buy another house quickly. You should reach out to a professional who can help you understand the tax implications of selling your home.

 

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Speed up Your Mortgage Closing Process With This Handy Four-step Guide

Speed up Your Mortgage Closing Process With This Handy Four-step GuideAre you in the market for a new house or apartment? If you are financing the purchase by taking out a mortgage, you’ll want to know how to make this transaction run as smooth as possible. In today’s article, we’ll share a quick four-step guide to speeding up the mortgage closing process.

Step #1: Check In On Your Credit Score

The first step before applying for your mortgage is to check in on your credit. Request a copy of your credit score and history from one of the major reporting firms. Go over this report, paying close attention to any old or outstanding items that you may have already dealt with. Many individuals have old delinquencies that must be challenged to be removed from the report, so take care of these first before applying.

Step #2: Have All Your Documents Prepared

As with any loan, taking out a mortgage requires a small mountain of paperwork. The best way to speed this process up is to have all of your financial documentation ready for inspection and use by the lender.

Note that each mortgage provider has different requirements for what you’ll need. A brief list of some items which are commonly requested includes your current employment details, recent pay stubs, recent W-2 forms or tax returns, proof of self-employment or other means of income, asset details such as bank accounts and investments and debt information such as other mortgages, student loans and more.

Step #3: Have An Offer Ready

If you have already settled on the home that you want to buy, it’s best to get your offer prepared in advance of being fully approved for mortgage financing. Your real estate agent will be able to help with crafting an offer that is subject to the home passing an inspection. It’s especially important to have an offer ready in the event that other buyers are competing for the same home that you are.

Step #4: Get The Inspection Finished Promptly

While your lender is completing the home appraisal process, you should be having the home inspected. Getting the inspection completed promptly will prevent any delays due to problem areas that might be uncovered. For example, a pest problem like termites may need to be dealt with, or minor repairs to the roof structure may need to be scheduled.

Following the steps above will help to ensure that your mortgage closing process goes as smoothly as possible. To learn more about your mortgage options or to get the pre-approval process started, contact us today. Our friendly mortgage professionals are happy to assist.

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How Can You Invest in Real Estate?

How Can You Invest in Real Estate?Many people believe that investing in real estate is something reserved only for the super-wealthy. In reality, this is not the case. Investing in real estate is a smart idea because property can generate a consistent cash stream while providing significant capital appreciation combined with tax breaks. There are multiple ways to invest in real estate, and no single path is better than the others.

Consider Real Estate Investment Trusts (REITs)

A real estate investment trust is a low-cost alternative to buying an entire property. Usually shortened to REIT, this is a company that allows investors to pool their money together before the company purchases multiple properties. REITs bring in money by renting, leasing, or selling the properties they own. Instead of individual investors having to purchase properties on their own, they can pool their money with other investors, reducing the barrier to real estate investing. 

Rent Out Residential Properties

When people think about real estate investing, this is usually the first thing that comes to mind. You can purchase a residential property and rent it out to people. This generates recurring income that can cover overhead expenses tied to the house, such as the mortgage. Then, as the property goes up in value, you build wealth. You can decide to rent the property out for short-term stays, which is a popular option with a vacation home on the lake or the beach. Or, you can have long-term renters if you want more income security.

Think About Flipping Houses

If you have ever watched a TV show about houses, you have probably run into flippers. This is the practice of purchasing a distressed property, fixing it up, and then selling it for a significant profit. If done correctly, you can make a lot of money with a much shorter time horizon; however, this requires a lot more time and effort, as you will need to coordinate a lot of contractors to fix the property and list it in a reasonable time frame. 

Consider Investing in Real Estate

These are just a few of the many ways you can invest in real estate. Think about the benefits and drawbacks of each option, and decide which is best for you. 

 

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Saving for a Mortgage Down Payment? 4 Tips That Will Help You Get There Faster

Saving for a Mortgage Down Payment? 4 Tips That Will Help You Get There FasterFor most people, the idea of saving more money each month is enough of a burden without having to think about investing in a home. A down payment, however, will require a lot more saving know-how and a lot more in liquid assets in order to be able to buy. If you’re trying to find ways to save a bit more each month, here are some sure-fire tips for raising the extra funds.

Re-consider Your Commute

Outside of rent, there are few things that will cost as much money as owning your own vehicle, so instead of holding on to yours, you may want to consider putting it up for sale. While a vehicle costs a lot in gas, there are also costs for maintenance, insurance and parking that quickly add up. By foregoing this expense, you can easily save significantly!

Stick To Your Budget

It might sound like a silly tip, but actually sticking to your budget can make a big difference in how much you’ll save. While most people have a few rules to live by, writing down every receipt and monitoring the things you overspend on can make a marked impact on your surplus when all’s said and done.

Cut Down On Coffee & Lunch

With the hustle of everyday life, many people run out for coffee or lunch every day and forget that these costs add up over time. Instead of spending $5 or $10 here and there, take your coffee to go and make your lunches at the start of each week. It may not seem like much, but this can easily add up to hundreds in just a short time.

Change Your Phone Plan

Many people think that all of the conveniences that come along with a smart phone are a necessity, but data can come at a high price and it may not be worth paying. Instead of eating a high monthly phone bill, talk to your provider about what deals they can offer you and what you can cut back on. It may seem small at first, but it will add up to a lot by the year’s end.

It can seem insurmountable to try and save up enough for a down payment, but the little things that you spend on each day can easily add up. If you’re currently on the market for a home and are considering your saving options, contact your trusted mortgage professionals for more information.

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Non-QM Home Loans: How Do They Work?

Non-QM Home Loans: How Do They Work?There are a lot of people who dream of owning a home one day, but few people have the cash to purchase a home outright. Therefore, you will probably need to take out a loan to buy a house; however, what happens if you cannot qualify for a loan with the traditional loan requirements? If you are not a W2 employee, you may need to go with a Non-QM loan. What do you need to know?

What Is A Non-QM Loan?

A Non-QM loan is a non-qualified mortgage. What this means is that you do not meet the standard requirements to qualify for a mortgage. Some of the factors that you need to meet to qualify for a traditional mortgage include meeting the necessary income requirements, having pay stubs, having a debt-to-income ratio that satisfies the lender’s requirements, and taking out a mortgage that is 30 years or less. Your fees also cannot be more than 3 percent of the value of the loan. There is a common misconception that having a Non-QM loan is bad, but that is not the case. Everyone is in a different employment situation, and a Non-QM loan could be the right move for some people. 

Why Take Out A Non-QM Loan?

There are a few reasons why you should consider taking out a Non-QM loan. First, they require less documentation than other mortgages, so you might not need to produce W2s or employment verification to qualify for a loan. You also may not have to meet strict credit score requirements. If your credit score is not the best, you can still take out a home loan with a Non-QM option.

Who Should Get A Non-QM Loan?

There are many people who should consider taking out a Non-QM loan. If you plan on applying for a home loan without proof of income, this might be the right option. Furthermore, if you are a freelancer, or if you are not a W-2 employee, this could be a solid choice. There are plenty of people who could benefit from this loan, and it is important to work with a professional who can help you.

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Man Vs. Machine: Why Using a Human Mortgage Professional Is Better Than Trusting an App

Man Vs. Machine: Why Using a Human Mortgage Professional Is Better Than Trusting an AppAre you currently house-hunting or plan to be in the near future? If you plan on using mortgage financing to pay for your home, you will soon discover that there’s no shortage of options available to you. You can meet with a local mortgage professional, apply for mortgages online and even download mobile apps that promise to set you up with a mortgage. However, is every option equal?

Let’s explore why, in the epic battle of man versus machine, you will want to place your trust in a human mortgage professional.

Human Mortgage Professionals Have Local Experience

The first and most important reason you will want to work with a human mortgage professional is their understanding of the local real estate market. While you are likely to be working with a real estate agent, your mortgage advisor is another pair of eyes-and-ears that can help to keep your home purchase on the right path. They are also working regularly with many local clients and can share insight and information that no website or app will be able to come up with.

A Human Can Appreciate Your Unique Financial Situation

Online and app-based mortgage technology is… cold. Algorithms are processing the math and other hard facts about your financial history, with little consideration of you and your family as people. When you meet with a human mortgage advisor, you’re speaking with someone who understands the challenges that regular people face. They have also worked with numerous other clients and can appreciate why certain circumstances may have come up in the past.

A Human Will Go To Bat For You If Needed

Finally, don’t forget that a human mortgage professional is invested in your success. A mobile app isn’t going to understand when it needs to go the “extra mile” to ensure that you get the financing you need. You can trust that a human will push for that extra bit of funding or those better repayment terms as they’re on your side.

The above are just a few of the many reasons that you will want to work with a human mortgage advisor rather than using a website or mobile app. Don’t believe us? Give your local professional (and human!) mortgage team a call today. 

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What To Know About Your Debt-To-Income Ratio When Buying A Home

What To Know About Your Debt-To-Income Ratio When Buying A HomeWhen you apply for a mortgage, your lender will do some quick math to figure out how much of a loan you can afford. Your lender will consider many factors, and one of the most important ones is your debt-to-income ratio. It is usually shortened to DTI, and understanding this formula can help you better understand how big of a house you can afford. 

An Overview Of A DTI

Your DTI represents the amount of money you spend compared to the amount you make. Your lender is going to have very strict DTI requirements when deciding whether you can be approved for a mortgage. The lender wants to make sure you are not taking on a loan that you cannot afford to pay. If you cannot pay back your mortgage, your lender ultimately loses that money. Generally, your lender will want to see a lower DTI as they go through your application.

Front-End DTI

Your front-end DTI includes all expenses related to housing. This includes your homeowners’ association dues, your real estate taxes, your homeowners’ insurance, and your future monthly mortgage payment. In essence, this will be your DTI after your lender gives you a potential loan. 

Back-End DTI

Then, your lender is also going to take a look at your back-end DTI. This the first two other forms of debt that could go into your DTI. A few examples include car loans, student loans, credit card debt, and personal loans. Generally, this is the most important number because it is debt that you already carry when you apply for a mortgage. Your lender can always make adjustments to your home loan to fix your front-end DTI, but your lender does not have any control over your back-end DTI. 

What Is A Strong DTI?

Every lender will take a slightly different approach, but lenders prefer to see a total DTI somewhere around 32 or 34 percent. If you already have this much debt when you apply for a mortgage, you may have a difficult time qualifying for a home loan. On the other hand, if you don’t have a lot of debt, your lender may qualify you for a larger home loan. 

 

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The Quick and Easy Guide to Determining How Big of a Mortgage Your Family Can Afford

The Quick and Easy Guide to Determining How Big of a Mortgage Your Family Can AffordAre you shopping around for a new house or apartment? One of the key considerations you will need to make is figuring out how much you want to invest in your new home. Below you’ll find our quick and easy guide to determining just how much “house” you can afford. Let’s get started!

Start By Making A Proper Budget

The first thing you’ll want to do is sit down and get a full budget put together. The easiest way to get the process started is to begin with two lists: income and expenses. For the income list, write down the amount of money your family brings in each month after taxes. If you have side income sources or extra income that tends to fluctuate over time, use the average amount for the past six months.

For the expenses list, write down all the spending that you do each month. Start with the major, stable items like rent, utilities and the like. Then work your way through to discretionary spending like dining out and other sources of entertainment. If it helps, go through your bank and credit card statements to ensure that you are not missing anything.

Once you have an accurate budget, you’ll know exactly how much you can afford to pay toward your mortgage payments each month.

Figure Out How Much You Can Put Down

Next, you’ll need to think about how much cash you want to pay as a down payment on your home. The larger the down payment you can afford, the smaller amount of mortgage financing you’ll need. While it might seem like a good idea to put as much as you can down, there are some things to consider. Any money you put against your down payment is going to be unavailable to you, which reduces your financial options. You’ll also lose the opportunity to invest it, which means missing out on potential returns over time.

Determine How Much House You Actually Need

Finally, give some thought as to how large or luxurious a home you want to buy. For example, if you have a small family and don’t need a large four- or five-bedroom house, you can instead opt for a smaller but more luxurious home. Conversely, if space is a priority, you may want to forego the high-end options to ensure you have enough room.

When you’re ready to explore your mortgage options, we’re ready to help. Contact your trusted mortgage professional at your convenience. We’re committed to helping you purchase the home of your dreams.

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