David Bailey

David and Erika Bailey Mortgage Professionals

Applying for a Mortgage? 3 Easy Ways to Make the Process Easier — and Reduce Your Stress

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Applying for a Mortgage? 3 Easy Ways to Make the Process Easier -- and Reduce Your StressThere are more than enough details involved in getting a mortgage and moving into your own home that you’ll want to know how to make the process as seamless as possible beforehand. However, there’s a chance you might not be aware of the things you can do to make it a little easier on yourself. If you’re currently looking for a home and are wondering how to streamline the approval process, here are some things to do before applying to minimize mortgage-related stress.

Get Electronic Documentation

In order to get approved for your mortgage application, you’ll need to provide documentation that will likely include bank statements, federal tax returns and recent paystubs, but providing or acquiring all of these documents in paper form can require a lot of drudgery. Instead of paper, get your documentation together and ensure it’s in electronic form so it can be easily accessed or sent from anywhere. This means you’ll have it on hand as soon as it’s needed.

Choose A House You Can Afford

As a potential homebuyer on the market, it’s easy to be swayed by your dream home, but if your dream home doesn’t come with an acceptable price tag, it’s important to move on to the next best opportunity. It can be very easy to be invested enough in a particular home that you can convince yourself you’ll budget for it, but the market can shift and this can push your monthly payment from difficult to not-doable. Choosing a home at an affordable cost will not only improve your chances of approval, it will also minimize your stress after the move-in date.

Have Your Down Payment Ready

It may be all well and good to know that your down payment money is in the bank, but it’s important that it’s in the appropriate account at least 3 months prior to your application submission so you can ensure you’ll be seen as financially sound. While it’s great to have money held in investments and RRSPs, it’s important that this down payment money is kept in an easily accessible account where it can be withdrawn without any time delays or financial losses.

There are many different steps and small details associated with obtaining a mortgage, but by having your electronic documentation and down payment ready, you’ll be well on your way to an approval. If you’re currently on the market for a home, contact your trusted mortgage professional for more information.

Deciding On A Mortgage For Buying A Fixer Upper

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Deciding On A Mortgage For Buying A Fixer UpperIt can be difficult to find a dream house, so many potential homeowners might be looking to save money by purchasing a home that they need to repair. Often referred to as a fixer-upper, this is a house that may require some extra work to restore to a livable condition. Not only is this a great opportunity to customize a home, but it could also be a valuable investment. At the same time, homeowners need to take out enough money to not only purchase the house but also cover the cost of repairs. How can potential homeowners decide what loan is best for a fixer-upper? There are a few options available. 

Consider Taking Out An FHA 203(k) Mortgage

One option is something called an FHA 203(k) mortgage. This is a loan from the Federal Housing Administration that has been specifically designed to help potential homeowners who are purchasing a house that needs a significant amount of repairs. As long as the cost of the home and the estimated repairs do not exceed 110 percent of the appraised value of the home, homeowners should be able to take out this type of loan.

Borrowers have to put down at least 3.5 percent and they need to have a minimum credit score of 580. Then, applicants can place themselves in a position to get approved for this loan. Keep in mind that the total cost of the property has to be less than the FHA mortgage limit for that local area. 

Look At A Fannie Mae HomeStyle Renovation Mortgage

Another option to consider is called the Fannie Mae HomeStyle Renovation Mortgage. This is a great option if the house requires major renovations. Borrowers can borrow money to cover potential repairs that are as high as half of the appraised value of the property. This could include energy efficiency enhancements, remodeling work, and repairs. As long as the repairs increase the value of the home, they should be covered by this mortgage. The loan will cover the cost of getting permits, hiring an architect, and purchasing materials. Even though this mortgage may be a bit more competitive, it also has a higher borrowing limit, opening more doors for homeowners.

A 20 Percent Down Payment: Is This Really Necessary?

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A 20 Percent Down Payment: Is This Really Necessary?Purchasing a home is a major decision, and it could be the most expensive financial transaction somebody ever makes. Therefore, it is important to get this right. One of the biggest hurdles for a new homeowner is coming up with enough money for the down payment. A lot of people believe they require 20 percent down to purchase a home. Saving this amount of money can be overwhelming, and some people are wondering, is this really necessary? There are several key points to keep in mind. 

Putting 20 Percent Down Is Not Really Necessary

When taking a look at the prices of homes, putting 20 percent down can seem like a pipe dream for most people. Fortunately, putting this amount of money down is not actually necessary. It is possible for people to qualify for a loan with significantly smaller amounts of money. For example, there are some lenders who might be willing to provide a loan to a first-time homebuyer for as low as 3.5 percent. Even though this is still a lot of money, it is not nearly as much as 20 percent down. Potential homeowners need to do their homework and work with down payment assistance programs to make this process easier. 

Why Do People Put 20 Percent Down?

So, where does the idea of putting 20 percent down actually come from? Many homeowners decide to put 20 percent down because they would like to avoid something called private mortgage insurance, or PMI. This is an insurance policy that potential homeowners may be required to purchase on behalf of the lender to protect the lender in the event of a default. When homeowners reach 20 percent equity in their homes, they can ask for PMI to be canceled. Because most homeowners do not want this additional expense, they may feel compelled to put 20 percent down. 

Find The Right Home Loan

Potential homeowners should not feel like their dreams are derailed simply because they need to put 20 percent down. It is possible to qualify for a home loan with significantly lower down payment percentages, but every homeowner has to assess his or her options. That way, they can make the best financial decision for their individual situation.

 

What is an FHA Streamline Refinance?

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What is an FHA Streamline Refinance?FHA borrowers have an exceptional program available to them called the FHA streamline refinance. It’s a simple way to get a lower mortgage payment and/or lower rate, but it’s not for everyone.

Read this guide to learn all about FHA streamline refinance and how it works.

What is an FHA Streamline Refinance?

The FHA streamline refinance allows FHA borrowers to skip most underwriting tasks including income and credit verification. It’s a simplified way to get a lower rate or change your loan’s term to get a more predictable payment.

Who is Eligible?

To be eligible for the FHA streamline refinance, you must be a current FHA borrower with a current loan. To qualify, you must meet these requirements:

  • Have an on-time payment history of at least 12 months
  • You must have owned the home for at least 210 days (6 mortgage payments)
  • Show you benefit from the refinance

The on-time payment history shows lenders you can afford a higher mortgage payment with a higher rate and/or riskier terms. Since the streamline refinance should lower your payment or improve your term, it should be even easier to afford the loan.

You must prove there is a net tangible benefit to refinancing. This could mean a lower payment, lower interest rate, or refinancing from an ARM to a fixed-rate term. It must make sense for you to refinance to qualify.

How Does it Work?

If you use the non-credit qualifying version of the FHA streamline refinance, you may not have to verify your credit score or credit history. Some lenders may check it though, so always make sure your credit is in good standing.

If you aren’t sure, pull your credit reports and see if there is any negative credit history you should fix before applying. Look specifically for any late mortgage payments, late consumer payments (credit cards, personal loans, etc.), or overextended credit (using up over 30% of your credit lines).

Most lenders don’t verify your income or employment and you won’t need a new appraisal. Lenders use the value from your original appraisal to determine your LTV and eligibility for the loan.

Most FHA streamline refinance loans close much faster than a traditional refinance because of the smaller documentation and verification requirements.

FHA Mortgage Insurance Refunds

Another great aspect of the FHA streamline refinance is the FHA upfront MIP refund. You’re eligible for the refund from 6 months after taking out your FHA loan up until 36 months. You’ll earn a prorated refund each month.

For example:

  • Month 6 – 70% refund
  • Month 12 – 58% refund
  • Month 18 – 46% refund
  • Month 24 – 34% refund
  • Month 36 – 10% refund

This refund directly lowers the amount of upfront MIP you owe at the closing, lowering your closing costs.

Final Thoughts

The FHA streamline refinance is great for current FHA borrowers who want to take advantage of today’s low rates or better terms. It’s a simple program that most borrowers qualify for as long as they have an on-time payment history and can show they benefit from the refinance.

What’s Ahead For Mortgage Rates This Week – October 18, 2021

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What's Ahead For Mortgage Rates This Week - October 18, 2021

Last week’s economic reporting included readings on inflation, core inflation, and minutes of the Fed’s Federal Open Market Committee meeting held on September 22 and 23. Weekly readings on mortgage rates and jobless claims were also published.

September’s Consumer Price Index rose by 0.10 percent to 0.40 percent. The Core Consumer Price Index for September, which excludes volatile food and fuel sectors, rose by 0.10 percent to 0.20 percent and fell short of the expected reading of 0.30 percent growth.

Feds’ FOMC Meeting Minutes: Policymakers Consider Tapering Securities Purchases

Minutes of the Federal Open Market Committee meeting held September 21 and 22 indicated that policymakers discussed when to taper the Fed’s purchase of U.S. Treasuries and Mortgage-Backed Securities. Opinions were mixed as some policymakers recommended faster tapering of asset purchases and others were concerned about the potentially negative impact on financial markets if the Fed reduced its asset purchases too quickly. No specific dates for tapering asset purchases were set during the current FOMC meeting, but analysts expected the Committee to announce its plan for tapering asset purchases at its next meeting.

FOMC members also discussed inflation and were divided on their forecasts for inflation. While some members expected high inflationary growth in 2022, other FOMC members said that Covid-related bottlenecks in supply chains caused higher inflation in the near term.

Mortgage Rates Rise as Jobless Claims Fall

Freddie Mac reported higher average mortgage rates last week as rates for 30-year fixed-rate mortgages rose by six basis points to 3.05 percent. The average rate for 15-year fixed-rate mortgages rose by seven basis points to 2.30 percent; rates for 5/1 adjustable-rate mortgage rose averaged 2.55 percent and were three basis points higher Discount points averaged 0.70 percent for fixed-rate mortgages and 0.20 percent for 5/1 adjustable rate mortgages.

Initial jobless claims fell to 293,000 new claims filed as compared to the previous week’s reading of 329,000 first-time claims filed. Continuing jobless claims also fell with 2.59 million ongoing claims filed; 2.73 million ongoing claims were filed in the previous week.

What’s Ahead

This week’s scheduled economic reporting includes readings from the National Association of Home Builders on housing market conditions. Reporting on sales of previously-owned homes, housing starts, and building permits issued are expected; weekly readings on mortgage rates and jobless claims will also be released.

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The Mortgage Outlet, NMLS # 36861 is a registered mortgage broker with the NYSDFS. All loans are arranged through third party providers. Office located at 280 West Main Street Sayville New York 11782

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