Posts Tagged ‘loan approval’

Lock and shop with rate float down

April 25, 2017

Last time we discussed the competitive market for home buyers. I suggested getting underwritten prior to making an offer on a home. That way the offer can say the buyer is “approved” and can close in about two weeks (only need the appraisal!). When I talk about this option with clients, they also ask about whether they can lock the interest rate. Most lenders/banks prefer a buyer be under contract to purchase a home, but that isn’t the case with Lock and Shop.

Buyers can lock in their interest rate today without a purchase contract, and then go out looking for a home. The program typically works like this:

  • We start the loan process as if we have a contract to purchase a home.
  • We submit the loan to underwriting for approval, and can lock the borrower into a 60 day rate lock.
  • This provides plenty of time to find a home, get under contract, and complete the closing

This is a great program for buyers. They can go ahead and get underwritten for a home purchase. They can also lock in a rate now, and not feel so pressured to find a home before rates could possibly get worse. With a 60 day lock, there really isn’t a rush on either side of the equation (finding a house and then getting loan approval). 60 days is more than enough time for both!

On top of that, there is a one-time FREE float down on the rate lock. The window to use the float down is within 30 days of closing (or rate expiration) and 8 days prior to closing (or rate expiration). If interest rates have improved by 0.250% or more, the rate can be lowered to the current market. That’s it. No fees and no tricks. There is a roughly 3-week window to use the float down, and rates must be improved by 0.250% or more.

If you’d like to learn more about the lock and shop program for a home purchase in Georgia, you know where to find me!

Competing in a seller’s market

April 18, 2017

By now I’m sure everyone is aware it is a seller’s market right now. In metro Atlanta, there is less than a 3 month supply of homes available to purchase. For a balanced market, it is good to have close to 6 months of homes available. This is a big change from a few years ago when it was a buyer’s market… low ball offers, take time looking, find the absolute perfect home. Today when making an offer, the initial offer starts at the list price. You better get to a property within day or two of it being listed or it may be under contract, and buyers are making compromises on a home. If the home has, say, 80-90% of what they are looking for in a home, make an offer!

Even with those strategies, buyers can still find themselves being one of many offers on a home in this crowded real estate market. How else can a buyer differentiate themselves from the competition?

                              How some home buyers feel in this market!

One way is being underwritten prior to being under contract on a home purchase. I can start the loan process, send out loan docs, collect financial docs, and submit to underwriting with a “To Be Determined” property address. Once out of underwriting, I can give a letter to my clients for an offer that says “Approved”…. not a prequalification letter… not a preapproval letter… a letter that says the buyer is approved for the purchase pending the appraisal. The buyer can also close in as little as two weeks. We only need the appraisal back at that point!

Looking to buy a home in Georgia? Having problems differentiating yourself from other buyers in this crowded market? Contact me today. I can not only help you get prequalified, but we can submit your loan to underwriting for an approval on the loan. That will give you a major advantage over buyers with a letter that says “prequalified” or “preapproved.”

Should I consider a 15 Year Mortgage?

August 27, 2015

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Someone recently asked me, “Do you recommend a 15 year mortgage now since interest rates are so low?”  To quote a CPA friend of mine when asked if a business expense is deductible, “It depends.”  The question I will ask in response is, “How much can you afford to pay every month?”  The answer to the question depends totally on the borrower’s budget.

While getting a lower interest rate is a very good thing, amortizing a loan over 15 years instead of 30 means that you pay significantly more principal with each payment.

So let’s play with the numbers to put the question in perspective:

Your friend Sally is looking to get a $250,000 mortgage on a single family home.  She has excellent credit and will make a 10% down payment.  Let’s assume that Sally would have received a 4.0% interest rate on a 30 year mortgage and her monthly principal and interest (“P&I”) payment would have been about $1,194.  For a 15 year mortgage, let’s assume that Sally would have received a lower 3.25% interest rate, but her monthly P&I payment would have been much higher at $1,757.

Over the life of the 30 year mortgage, Sally would spend $179,674 in total interest payments.  Over the life of the 15 year mortgage, Sally would spend $66,201 in total interest payments.  Ultimately, Sally would save about $113,500 in total interest payments by selecting the 15 year loan.

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Saving that amount of money over the life of the loan is fantastic.  But, on the flip side, Sally would have to pay an extra $560 per month to “earn” the lower rate.  Only Sally can decide if that fits in her budget.  (And of course, Sally would have to earn an income high enough to support the larger payment based on our debt to income guidelines.)

So if your friend Sally, or anyone else you know, wants to buy a new home and thinks a 15 year mortgage is the way to go, have her contact me and I will run the numbers for her.  I’ll take the time to explain the details, and then let Sally make the decision that is best for her family.  There are other ways to reduce your total interest expense, even if you select the 30 year mortgage.  Curious?  Call my mobile phone or send me an email to start the conversation now.


How to keep your loan approved – Credit

August 18, 2015


Wrapping up a three-part series on ways to avoid causing a loan that is approved to be delayed or even denied. One thing to remember as this series comes to an end is that any of these nine examples can cause a loan closing to be delayed or denied AFTER the loan has been approved through underwriting.

How can this be? The loan approval is based upon the information provided to the underwriter. If the parameters change in income, assets, or credit, then the file must be reviewed again (delay closing). Depending on the change, the borrower may no longer qualify causing the approved loan to now be denied.

We’ve talked about income and assets. Today, we’ll finish with credit.

  • Don’t forget to pay your bills on time: I know, this should be obvious, but you’d be surprised. This one seems about as obvious as not quitting your job” from the first post in this series. A borrower’s credit will be pulled again right before closing. If bills were not paid, the credit score could be impacted. At a minimum, this would cause the file to go back to underwriting. If the score is now too low, then the loan could be denied.
  • Don’t buy a car OR trade up on a lease: I’ve had clients get approved for a loan, and then decide to buy a car because they think the mortgage loan is “out of the way.” The loan isn’t approved until it is closed. If a new payment is found, then the file will need to go back to underwriting causing a delay in the closing. If the payment is now too much on a monthly basis with the new home, the car purchase could cause you to no longer qualify to buy the home.
  • Don’t have anyone pull your credit once the loan process begins: This is how underwriting will find out if a car is purchased OR a credit line is opened to buy appliances or furniture. When credit is pulled, the pull is immediately filed under the “inquiries” section of the credit report. The new car payment, appliance payment, furniture payment, etc. won’t be on the credit report yet, but the inquiry is definitely there. When credit is pulled by underwriting on the day of closing, and sees a new inquiry, this inquiry will need to be addressed. If no credit was extended, then closing simply gets delayed. If credit was extended, then the loan goes back to underwriting. Again, depending on the amount of the new payment, it could cause you to no longer qualify on the home loan.

Looking to buy a home, but are also in need of a car? I get it. Life happens. Sometimes you need a car and a home. In my almost 10 years of closing home loans, this scenario happened several times. Contact me today if you are buying in the state of Georgia. I’ll make sure you know how to proceed if you are in need of buying a car and a home at the same time.

With all of these points about actions to avoid, it will hopefully cut out unexpected failures and get you into your new home on time and stress free!