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FIND YOUR DREAM HOME OR APARTMENT
Tips from a mortgage underwriter..
.A credit report pull only reduces your score by 3 points, not a big deal for most people, shop your rate!!!
DON'T transfer money all over the place, this will only cause underwriters to ask for more documentation.
If you are buying a new construction home, expect your taxes to double or triple in a year or two, they are only assesed on the land the first year. Either put money aside to catch them up or ask your lender to collect more with the escrow account. Trust me, you will be happier in the end.
Buy less that you are preapproved for
If the appraisal comes in low and the seller will not lower to that price, walk away!! Especially in todays market, you do not want to go underwater the first year.
Don't trust anybody -- the bank or your lawyer -- and always double check their information. Once bought a house where the escrowed amount included the tax amount which my attorney supposedly checked. Unfortunately not thoroughly enough. A year and a half later when the bank realized there was an error someplace, it turned out that the taxes that the professionals had "checked" were incorrect. The actual tax amount was approximately $3500 more than what my escrow included so guess what happened to my mortgage payment? Need I add that I would not have qualified for the mortgage in the first place if the correct tax amount was used. So double check all the numbers and call or visit the village or town clerk's office and dig out the information yourself. Furthermore, leave some flexibility in your mortgage. Although the bank will compute your payment, give yourself a few thousand dollars of "what if" space, because if your taxes increase for whatever reason your mortgage will increase as well.
Yes, most of these tips are good ones, with the exception of shopping rates. Every time you go to a different bank, mortgage company, or mortgage broker; you get your credit ordered. That seriously does damage to your credit. Plus you have to ask about the stupid points thing. Sometimes better rates are available because of "points". And points cost you money.
I liked my mortgage experience. No hidden fees or complicated points stuff. Great rate.
Of course this article will suggest that you shop rates and use a mortgage broker. Looks who is sponsoring this ad. It's Quicken Loans. They want you to use their services.
Use a realtor that's highly recommended and ask for their input. Ask around for a good reputable lender.
For one thing, this article does NOT cover such indicators as "bank deception". During the "housing buble", I wonder how many banks came forward, to tell applicants the conditions of the sub-prime mortgages? How many others "cleared" themselves, with the excuse "The applicants should have asked. If they had asked, we would have told them". I ask you, how many people have accounting degree's, so that they KNOW the ins and outs, of loans, mortgages, and so on. THIS is how people get suckered in. Then, there is all the fancy wording, such as "amortization", "negative impaction", and others I cannot even spell, let alone pronounce.
Then, and here is a REAL BIGGER, especially in this Depression economy:
Job Hopping
Sure, I am sure that MILLIONS of Americans, including myself, would LOVE to have long-term, steady, employment. What this article made NO attempt to address is the factor of when people land jobs, only to be "out-sourced" to thrid world countries. THIS is what this article should have addressed, BUT did NOT. I mean, really, outside of politicians, and C.E.O.'s, does ANY American have Job Security, anymore? As for "Steady Employment", this dream died out, in the 1980's, under the late Ronald Wilson Reagan.
In the time since Mr. Reagan fired the Professional Air Traffic Controllers, for striking for workers rights, workers have had NO "Job Security" since then. This is why so many workers must "hop jobs" so often. It is either change jobs, almost yearly, or face long-term un-employment.
Yet this article makes NO attempt to address these truths. I have to wonder WHY this is? What is this journalist so afraid of?
WHY? WHY?? WHY???
Jeff1947: You are quite correct and my oversight. I should have included that all documents for the closing (including deeds / titles) be submitted to my lawyer for review a week before the closing date.
As for not getting the loan, I recommend that when finalizing the decision to buy a particular piece of property that a second or third property has already been decided upon to avoid being pressured into buying a specific property when additional costs are added to the deal. In other words, always have a backup plan both for which home you will buy, as well as who will finance the purchase. It is a whole lot easier to buy a home and loan than to get out of either one. If the
negotiations begin to turn against you, be prepared to walk away while you still can. There are plenty of homes for sale and lots of people to loan money.
Barry must be a lawyer. Sounds like good advice, but the problem is, you don't get to see most of the contracts you're required to sign until you get to the closing table. If you plan to bring your lawyer along, you're entitled to do so, but better bring sleeping bags and enough food to last a couple of days, because if your lawyer wants the lender to deviate from their standard contracts, it's going to take a very long time ... and it could very well mean you don't get the loan.
If that's the plan, tell your loan officer and the title company that you want the closing docs sent to your attorney a few days in advance of the scheduled closing for review. If you don't make this request, the closing docs aren't usually sent to the closer any more that 24 hrs in advance, and often only an hour or two before closing.
In my experience, the average closing takes about 40 minutes, and involves signing approximately 100 documents, which works out to about 24 seconds per document. I can only recall one closing in which all of the documents signed were actually read by the borrower, and that one took about 8 hours.
Mistake #15. Hire a lawyer to review and explain to you in detail ALL loan applications, bid offers to buy property, closing papers, amendments to any contracts or ANY OTHER PAPERS THAT OBLIGATE YOU BEFORE YOU SIGN THEM.
The real-estate people will always tell you that you need to make the offer right now as there are two or three other people ready to buy this property now and you will miss out on this bargain home....NUTS! Always explain that all contracts will have to be reviewed by your own lawyer and then explained to you by him/her. Remember: there is no such thing as a standard contract, no matter how many people tell you there is such a thing. Just ask your lawyer.
Interview the lawyer just like you are hiring a new employee. Explain what you expect of him/her. If the person doesn't think they will will have time to explain all that detail paperwork to you (may involve 3 or 4 meetings) then move on to someone else. Your lawyer must be working for YOU, not the real-estate agent, bank, etc. It may cost you a grand or two, but it has saved me many thousands over the years. On our first home purchase, the real-estate agent prepared all the closing papers which included a $12,000 street & sidewalk tax assessment (suprise) that was past due on the property as an item that we would pay for AT CLOSING. Needless to say, all the closing paperwork had to be retyped. On our third home closing the property description for the 40 acres and the home was only 30% complete because the realtor who typed those papers up ran out of room at the bottom of the page.......and just stopped typing! My lawyer caught the error and had to sit down at the closing for the next 2 hours retyping all the paperwork. BEST MONEY I EVER SPENT! Always bring your lawyer to the closing to protect you. It is cheaper to pay him a little extra than the thousands to correct the errors or outright fraud in a contract after you have signed it.
Mistake #14. As much as it may be painful, don't buy a home until you have 50% down payment plus closing costs and a few thousand in cash left over after closing and moving in to cover the unexpected. The higher down payment will allow you to refuse setting up and paying to a banks escrow account for realestate taxes, home owners insurance, etc. I personally have had the bank who financed our first loan FAIL to pay taxes and home owners insurance from my escrow account. I found out about it only because my insurance man was an old friend of our family who called to ask if we were having $$$$ problems. The bank made excuses that the mail must be slow (what...3 months ?). When we bought our next home and ever since, we have refused to go along with the bank managing our escrow account. We set up a savings account at ANOTHER BANK then add to it each month to covers taxes, home and auto and life insurance. When the bill comes due, we transfer the money to the checking account and there is no pain involved, and we KNOW the payment has been made. We pay our property taxes IN PERSON AND DEMAND A SIGNED RECIEPT over the counter at the county treasurers office. Don't take chances with loosing your home due to banking errors: remember they are never responsible!
Understand, folks, that mortgage lending is a whole new ballgame. Any loan with less than 20% down (or 20% equity in a refinance situation), and less than about a 700 FICO score, is considered "sub-prime." Virtually 100% of sub-prime loans are now backed by the government -- Freddie Mac, Fannie Mae, FHA, and VA, which either insure or guarantee them. But there's now a caveat: if the loan goes bad, and if the government agency can find any jot or tittle in the underwriting process that's missing or over-looked (and they can always find one), the lender has to buy the bad loan back and live with the losses ... which can be 50 to 75 times what the lender made when it originated and sold the loan. The lenders are being sued at every turn for making loans that the government practically forced them to make, and when borrowers don't pay, the foreclosure process gets tied up in courts for years by attorneys empowered by Dodd-Frank Financial Reform and the recently implemented Fed "Final Rule."
It's a wonder to me why any lender would ever make a mortgage loan under these conditions. Maybe we will go back to where we were before the FHA was born in 1933. Back then, the average home cost $5750, and to buy it, you had to put 50% down and pay the balance over 3-5 years.
