YES You Can! The TRUTH on getting a mortgage…

It is true that getting a loan today is very different than getting a loan a few years back, between 2003 and 2007 investors were practically giving away loans to anybody who had a semi decent credit score without even verifying income and many times without verifying employment. During this abnormal period the mortgage industry experienced a fantastic phenomenon. I don’t mean fantastic in a good or bad way but simply by its mere definition “imaginary or groundless in not being based on reality; foolish or irrational” the same applies to phenomenon “something that is impressive or extraordinary”. It is because of this fantastic phenomenon we experienced that lenders have become ultra conservative. They have literally lost their shirts on many poor performing loans. However, they have no choice but to march on, after all they are still in the business of lending money. And the way they are staying in business is by offering the safest mortgage product available to our industry, the FHA loan. FHA has always been there, it was just not the preferred choice especially when lenders were not requiring income docs and when wholesale investors were offering 100% financing, low rates, no mortgage insurance, oh! And lets not forget no employment verification. Borrowers with high scores were practically insulted if you asked them for so much as a W2 or a bank statement. There is plenty of blame to go around, but let’s not digress.  

 

1. Is it possible for me to get a loan in a reasonable time frame with a reasonable rate?
2. How do I get a loan when lenders are so tight?
3. What do I need to ensure I get the right loan for me?
4. Who do I call?

 

Answers:

1. Yes, it is possible to get a loan today in a reasonable time frame at a reasonable rate. However, you have to do your part. You must choose a mortgage company that is FHA approved (directly by FHA). It is important that they are an FHA directly approved lender because there will be no additional parties that will delay your closing. Also, if you are dealing with an FHA approved Mortgage Company you will get a better rate than if there was an additional party involved. To find an FHA approved lender you can go to http://www.hud.gov/ll/code/llslcrit.cfm and type in the name of the lender you want to check or use the different criteria available on this page. You can also go to www.hud.gov and type in “lender list” at the top right hand side and click search, it will be your first choice in the results.
2. Lenders are tight because they have to survive, they are tight because they have lost a lot, they are tight because they are helpless to change their past decisions, they are however still in business and are still willing to offer loans to qualified buyers/borrowers. For the most part there are a handful of mortgage programs available today. The most popular and most obtainable are the conventional and FHA Government programs. These programs have similarities and both offer fixed rates and adjustable rate mortgages. These programs do require full disclosure of income and assets but have several options for buyers who are limited in down payment and assets needed to pay closing costs. FHA is a more obtainable program because if allows a buyer to put as little as 3% down payment and that 3% may come from several flexible sources (not just from you). Speak to a reputable mortgage company to guide you through this process.
3. Here is what you need to get a loan today: last 2 pay stubs, last 2 years W2s or last 2 years tax returns (if you are self employed or a 1099 worker), last 2 months bank statements of all your accounts (ALL PAGES even if they are blank), last quarterly retirement account (401K, IRA, Deferred Comp ALL PAGES even if they are blank), copy of your social security card and driver’s license. Before you start shopping you MUST GET PRE-QUALIFIED with a reputable mortgage company that can spend the time with you to review your credit, your income docs and your assets. This person can give you your maximum sales price and will be very useful throughout your process in giving you payment scenarios to help you and your family budget appropriately.
4. Who do you call – You call a qualified mortgage company that is willing to spend quality time with you. This is one of the most important transactions you will make in your lifetime, you should ask any and all questions you have, you should get a reasonable response time, and you should meet face to face.

 

Tricks of the trade

Here are some suggestions that will help you in your journey to home ownership:

 

  

1. Tell your realtor that you want the seller to pay your closing costs. This is very common today and represents a substantial amount of money that you will not have to pay. An FHA program will allow the seller to pay up to 6% of your closing costs and prepaid items such as insurance and escrows. 6% is more than enough to pay all your costs. You must demand it.
2. Don’t fall in love so much with a house that you are negotiating with your heart and not with your head. There is an unprecedented amount of inventory, give yourself an opportunity to shop and choose the best combination of location, sales price, and sales incentives (such as seller paid closing costs, interior and exterior upgrades and living area size).
3. If you don’t have enough money for the down payment – ask your realtor or mortgage consultant to help you in getting a state/federal/count or city grant. There are many grant opportunities out there that only require a small amount of leg work. Although most have income restrictions you won’t know unless you ask. If that doesn’t work you can always ask a family member for a gift. FHA allows the full 3% down payment to be a gift. So let’s see you get a grant or gift for the down payment and the seller pays all your closing costs, WOW! That sounds like 100% financing to me.
4. If you are currently renting and are thinking of buying a home, you picked the best time to do so. Whether you are credit challenged or not you should pay everything possible (such as rent, utility bills, car payments, and credit card payments) with a personal check because a check is traceable and verifiable. These payments you’ve made by check can serve as a compensating factor or as alternative credit in the qualification process.
5. Make sure your Realtor and Mortgage rep are full time, this is a very important decision you are about to make and you want someone that is dedicated to you and your needs, and you want to be able to reach them with ease.
6. Ask your Mortgage Rep to help you shop for a title company that is willing to give you the best service at the lowest price. Although, this may not always be your choice depending on the property you choose, whether or not the seller is paying for these fees and/or the county you live in, it is important to ask.
7. Ask your mortgage Rep to analyze your credit fro you, mortgage reps deal with credit issues all the time and are de facto experts in analyzing credit, you can get good advice from them.

 

Getting a mortgage is not hard if you have the right guidance and the right motivation. Mentally prepare yourself for the challenge and carefully choose your trusted advisors (Realtor and Mortgage Rep). My name is Mario Cerrato and I am the president of Regal Lending Group, we are located in Davie Florida and can give you the right advice. Give us a try, you won’t be disappointed.

 

 

 

 

 

The questions today are: