Tag Archive: Homes in Louisville

Nov 25

Rate Calculator

Rate Calculator vs Payment Calculator

I recently searched for an online rate calculator for mortgage interest rates. All of the top results pointed to payment calculators instead of a rate calculator. This seems strange because I use a rate calculator every day.

In order to accurately compute a mortgage payment we need an accurate interest rate. This is particularly important when trying to estimate a payment on a conventional loan because the interest rates are tiered.  The tiers are so complicated one needs a calculator.  Here is a link will shed light on mortgage interest rate tiers.

For the most part the public believes mortgage lenders have only one interest rate, and I base this statement on my last thousand rate calls. Every single person asked for my best interest rate not for the rate they would receive.  There is no way to tell if every one of them thought they should receive the best rate or just assumed there was only one rate. 

My interest rate calculator is proprietary software that I use daily.  It is the only method I know to quickly calculate an exact interest rate. 

There is a sequence that should be followed to reach an accurate estimate. It begins with the individual’s credit score from a tri-merged credit report.  When I receive an initial call from a home buyer one of my standard questions is if they know their credit score.  Nine times out of ten their true credit score is 20 to 40 points below their answer. The free credit scores available online are not from a tri-merged credit report.

Using an online mortgage payment calculator without access to an interest rate calculator is dangerous.  The results could easily be off 30% to 40%. The only safe way is to have an experienced loan officer guide you through the process.

Nov 17

Conventional Mortgage Credit Standards Page Added

Conventional Mortgage Underwriting

Explaining in plain English how the mortgage industry works continues to be an endless project.  The larger the resource becomes the more there is to explain. 

The newest page, Credit Standards for a Conventional Mortgage, made me realize just how big the project has become.  But it is a good exercise, the more I try to explain the easy way for a home buyer to arrange financing the more I see opportunities to streamline the process. 

A little bit of preliminary team work between the home buyer and the loan officer can really speed up the process.

Nov 16

Mortgage Rate Watch November 16, 2012

No change in mortgage interest rates over Wednesday’s pricing.  The Industrial Production Report was released this morning and the index declined very slightly when the experts were expecting a slight improvement. 

I believe the storm has been more of an influence on the markets than the recent financial reports.

The last quote I received this morning for the bond market showed a little improvement which is a good sign on a Friday.  Over the years it seems to me Friday’s are usually off days, investors taking money out of the market over the weekend in case we attack Canada or something silly like that.

 

Next week is going to be a light one for financial reports, home sales will be released on Monday, and housing starts are due Tuesday, sounds backwards to me.  Ironic but Jobless Claims and Consumer Sentiment are both due out Wednesday, as are the Leading Indicators. 

 

2:00 update, Mortgage Backed Securities are up 8/32 which is good for interest rates, when bonds go up interest rates go down.  That is not enough change to impact rates yet, but at least they are headed in the right direction.

 

There will be fewer hours of trading next week, the market is closed Thursday and half a day Friday in observance of Turkey Day.

 

Nov 15

Working on Page For Step 5

Just added a page that is going to outline the processing stage of getting a mortgage application approved.  Will be an ongoing project as the mortgage industry changes.  May not be able to work on it tonight, Deb’s birthday so going someplace special. 

Here is the link to Step 5

 

Nov 08

Update to Buyer Resource Center

Updating the Buyer’s Mortgage Application Resources

There have been many changes in the last couple of years in the area of processing a mortgage loan.  It seems the mortgage industry is in a constant state of change. I thought it would be a good idea to start from the beginning and track a few applications comparing them to the information on this site.

Seems like some of the stuff I wrote not long ago is already out of date.  Going to be updating everything over the next few months, bear with me, it will be worth it.

The biggest problems recently all seem to be focused around credit reports and support documents. Home buyers that need a mortgage to complete the purchase are having a difficult time gathering the right support documents, or their docs contain information that is a problem.  I am going to break down every document and whenever a problem pops up will explain it here.

The Start Page for the Buyer is Located here. –>

The Steps are under construction but the beginning is here. –>  

Oct 27

Mortgage Helpful Hint #8

 

You and Your Money are Both Needed at the Closing.

 

If everyone that is signing the note and mortgage live in the town where the closing is taking place then they need to attend the closing.  One of the most common questions asked by both buyers and sellers is how do I get a Power of Attorney for the closing? You don’t. 

We do not want a signatures by Power of Attorney (POA) on the note and mortgage, original signatures only!!!  The only exceptions are out-of-town work assignments.  If you are in the military stationed overseas that would be a valid issue.  If you just don’t want to attend the closing that isn’t good enough.

All of us have worked very hard to get to this point so the closing isn’t a surprise.  You must attend the closing in person even if it requires taking off from work.  If you have small children get a baby sitter.  We love kids too but you are signing some very important documents, pay attention.  The $20 of missed work or paying a baby sitter pales in comparison to messing up the closing on a mortgage.  It deserves your undivided attention for about 30 minutes to an hour.  Redrawing all of the mortgage documents can take days, do not let this happen to you.

If your money is in out-of-town bank account it can take a few days for the money to arrive once you start the process.  A large deposit from an out-of-town institution to your local bank account might cause your local bank to freeze your account until the funds have cleared.  This will stop everything, don’t wait until the very last-minute to assemble the cash needed at closing.

But remember, don’t move money around without my help, all funds must be sourced.  There are right ways and wrong ways to move money, let’s keep your stress level low by doing it correctly the first time.  

 You and your money are both needed at the closing!!!

Please send a link to this page to any of your friends and family that are planning to buy or refinance a home.  They’ll be glad you did.

 

Oct 24

Mortgage Helpful Hint #7

Clear-to-Close

The mortgage part of the transaction CAN NOT CLOSE until the underwriter has signed off on everything and changed the status from processing to Clear-to-Close!

Here is How it Works

Step 1.  Prequal Application.

Step 2.  Flips to a real deal once a property is under contract and we have the support documents.

Step 3.  Loan officer and processor gather and package all of the needed support documents, title report and appraisal then submit to underwriting.

Step 4.  The underwriter reviews everything in the file and approves the loan subject to clearing ALL of the conditions.

Step 5.  All loan applications approved by an underwriter have conditions that must be cleared before closing, get a new pay stub, fix the typo, have the borrower explain the deposit, etc.  An endless list!!!  They take time to address…

Step 6.  Gather all the conditions from Step 5 and submit to the underwriter.

Step 7.  Underwriter reviews the conditions and changes the status to Clear-to-Close.

Step 8.  A closing date is set and a closing package is sent to the closing attorney.

Step 9.   The closing attorney prepares all of the documents needed at closing, including the closing statement which contains the final number you will need at closing.

Step 10. CLOSING!!!!

 It is easy to see that all of these steps take time to complete.  And Steps 5, 6 & 7 might be repeated a couple of times.  For example, if the underwriter asks for a new bank statement and the one we receive contains cash deposits then something else is needed, source the deposits.     

 

The single biggest glitch is getting support documents from the borrower.  Once it is known that a document is required and requested from the borrower, every day that we do not get the necessary form is one day the timeline is pushed back. 

 

Every document in the file must be the most recent version prior to the closing date.  If you get paid every Friday and on Monday we request last Friday’s pay stub and you do not send it over until the following Friday then a week is added to the timeline and we’ll need another pay stub in addition to the one you sent.  If you think this drives you crazy, try sitting in my chair for a week.  If you don’t send it then we don’t have it!

We get outdated bank statements with pages missing, or tax returns with missing schedules.  I’ve had people fax me blank pages, guess what, I can’t tell who sent them if they are blank.  Take your time and help me help you.  I know your job and family are important, so is buying a home.   

Important!

Home Buyers Back Themselves Into Corners!!

If you set a closing date prior to the status being changed to Clear-to-Close then you are backing yourself into a corner.  We will do everything we can to deliver on time but EVERY STEP must be completed BEFORE we can close.  A Target Date is not set in concrete until we are Clear-to-Close.

 

The best strategy is to give yourself plenty of time, get everything finished then set a closing after it is Clear-to-Close.  No one does this but it is the only path that won’t raise your level of stress.

Please forward this email to any of your friends and family that may be planning to buy or refinance a home.  They’ll be glad you did.

 

Oct 23

Mortgage Helpful Hint #6

Cash to Close

 We have already covered in Helpful Hint #2 that EVERY PENNY used at the closing must be sourced (show where it comes from).  Be ready for this well in advance. 

 If you show up at closing with a check drawn off of an account we have not verified then we can not close!

 We cannot accept CASH at closing, I had a guy show up with a briefcase full of cash once, did not close, took weeks to fix before he could close. 

The check you bring to closing must be drawn off YOUR account from funds we have sourced, made payable to yourself for the exact amount needed at closing.  It is okay if you bring too much, the closing attorney will refund the difference at closing.  It is not okay to be short on funds at closing.

 There are a couple of exceptions to checks allowable only from your account.  If you are selling a home right before buying another home is one exception.   Do not deposit the check you receive from the first closing unless there is plenty of time for it to clear (a week or more).  If you deposit more than $5,000 in your account there is a very good chance your bank will freeze your account until the check clears and they receive the funds from the other bank.  Your bank will not certify funds until they have them from the other bank.  Under this circumstance you should bring the net proceeds check from the first closing to our closing.

 BUT DO NOT assume the closing attorney preparing your deed and mortgage will accept an escrow check from another closing attorney they do not know.  If you intend to bring a third-party check to closing and endorse it over then we need to clear that PRIOR to our closing.  

 Another exception is when the buyer is receiving a gift from a blood relative, that check can be from the donor’s account.  But don’t wait until the last-minute, this is something that should be covered very early in the process.  If the donor proves funds from one account but writes the check from another…BOOM! Your closing will explode.

 Every Penny must be sourced if you are using a mortgage to finance the purchase.  Do you think I care if your money is buried in a fruit jar under your neighbor’s house?  Absolutely NOT.  These are Federal Regulations, not my rules.  All I am trying to do is help you get from where you are to where you want to go without stepping in a mess.  Call me before moving money around, not after.  I can’t fix something that is already messed up.   

Please link this page to any of your friends or family that are planning to buy or refinance a home.  They’ll be glad you did.

Oct 17

Mortgage Helpful Hint #5

Do Not Change Jobs

Okay this one sounds silly but it happens often enough I included it on the list.  Remember we are taking a snapshot of your position, your ENTIRE POSITION,  financial, employment, credit, etc.

 ANYTHING that changes has the possibility of changing the picture. 

 Probationary periods on a new job can train wreck a real estate mortgage transaction.  So could a lower pay scale, or different type of job, etc.  ANY change, even one for the better should be discussed BEFORE doing it.

 My goal in sharing these Helpful Hints is to make your experience as pleasant as possible. 

Oct 16

Mortgage Helpful Hint #4

Stay Home During Mortgage Processing

Last month I had 5 mortgage closings delayed because the buyer went out of town the week before the closing.  Four of them did not return until the day of the scheduled closing!!

The underwriter is going to review everything right before the closing even if the loan was approved a week or two before.  They will ask for SOMETHING. 

You can’t furnish what she/he asks for if you are mountain climbing in Bora Bora. 

If you go on vacation the week before closing and run up the balance on a credit card you loan might be in jeopardy and may not close.  See Helpful Hint #3 on New Debt.

If your job requires travel then you are probably better prepared for this Hint than most buyers, do not quit your job just to stay in town!

The mortgage industry is going through a period of extreme scrutiny.  This means a mortgage loan cannot close with loose ends, every “T” must be crossed, etc.  I suspect it is a stressful time for many home buyers causing them to have a desire to flee.  

If you follow the recommendations on this site the stress level will drop.  If you leave town with loose ends in your mortgage application the stress level will increase ruining the vacation.  Wait until after the deal is closed, then relax on a much deserved break.  

My goal in sharing these Helpful Hints is to make your experience as pleasant as possible.  If you want to finance a home in Kentucky and want be pre-approved the online application the quickest way to get started.  It is free, will give you access to all of the information you need, we even pay for the credit report.  No application fee, no cost or obligation to be pre-approved for your next mortgage.  The link to the online application is below my photo.

If you have friends that are planning to buy or refinance a home be sure to tell them about the Helpful Hints.  They’ll be glad you did.      

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