What Documents do you need to gather to get a mortgage?

May 5, 2016 by Michael Eisenberg

What documents do you need to get a mortgage?

Want to go from being a renter to being an owner. With a little planning, some savings you can do it.

As a Bellingham Real Estate Agent people often ask me questions about mortgages. I usually answer their basic questions but refer them to a mortgage professional or lender for more details.

The best plan to buy a home is to get pre-approved by a lender before you start looking. No need to fall in love with that $300,000 house only to find out you only qualify for $275,000. In order to get that pre-approval, you’ll need to gather some documents. These days some of these documents can even be gathered and verified electronically by you or on your behalf by your lender with your permission of course.

If you are a renter you will need 2 years of rent receipts and some lenders will want a letter from your landlord saying you paid your rent on time.
Income verification for the past 2 years. Usually, that will mean copies of 2 years of tax returns. Some lenders may want to see copies of your W-2 as well as Form 1040.
Pay stubs or proof of past 2 months of income. If your self-employed profit and loss statements
Bank Statements for the past 2 months.
Documents for any debt you may have. Lenders can usually obtain that information from your Credit report, which you will have to authorize them to obtain.
Income or debt from child support or alimony.
Proof of reserves for 3 months.
Sources of any large recent deposits or gift funds

Once your pre-approved and find a home and make a deal you can learn more at this article about what documents you will be signing when you get that loan to buy a home.

What are the Mortgage Documents that you will be Signing?

May 4, 2016 by Michael Eisenberg

What are the Mortgage Documents that you will be Signing?

The better educated you are about the process of buying a home, the less intimidating the home buying experience will be. That is why it is important to learn about the Mortgage Documents you will sign when you get a loan to buy your new home.

As a Bellingham Real Estate agent, I often find myself explaining to buyers the papers they will sign when buying a home.

There are basically four documents that will play a major role in the purchase of your home. Learning about them before you sign anything will get you a bit more comfortable when borrowing money for your new home.

At the end of 2015, The Consumer Finance Protection Bureau (CFPB for short) changed how some of the mortgage documents look in a real estate transaction as well as some timelines regarding this paperwork. This change is now known as TRID. TRID has had a massive impact on the real estate industry. Everyone from mortgage companies to real estate agents, attorneys, even buyers and sellers.

TRID makes it easier for consumers to understand the costs and fees that they’ll see at closing. The documents you now get from your lender at application and closing are like comparing apples to apples, before TRID it was more complex and more like comparing apples to oranges.

The 4 Important Documents You Will Sign For Your Mortgage
The Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) were put in place by congress to protect consumers from hidden fees and other possible abuses from lenders, real estate agents, and title companies. TRID makes sure all of the various fee disclosures and mortgage rate documents are in two standard forms, the Loan Estimate, and the Closing Disclosure.

These loan documents have been simplified somewhat so consumers have an easier time understanding the terms of the loan. You should review these forms very carefully when you receive them to check and see what you are paying for, how much you are paying and is this what you were told by your lender when you applied for your loan.

1. Loan Estimate

The Loan Estimate is a document that spells out the details of your mortgage. It includes your proposed payments and an itemized list of your closing costs. You should get the Loan Estimate within three days from the time you apply for a loan. Review the Loan Estimate carefully to make sure you understand exactly what the loan will entail and that you are comfortable with all of the terms.

Shopping for the lowest mortgage interest rate is not the only thing you need to be looking at. There are other costs that factor into what you are paying for. For example, some lenders will give you a lower interest rate if you buy down the rate with “points”. Lenders often have different fees and closing costs, some Credit Unions will have very low fees but may have higher rates. Check all the numbers to make sure you are getting the best deal.

This is how some borrowers end up paying too much for their mortgage. Instead of shopping for the lowest rate, home buyers should be looking at the entire package and all the costs of each program.

2. Closing Disclosure

The Closing Disclosure will now look almost identical to the Loan Estimate. It also has information on the loan terms, as well as a detailed list of who is being for what – buyer, seller, and third parties. This document will have all the costs (this will include sales price, various closing costs, and any prepaid items, and pro-rated items like taxes) related to the sale and who is paying for those costs. You should receive the Closing Disclosure three days prior to the closing of the sale.

3. The Promissory Note

This is the actual contract between borrower and lender. The buyer/borrower promises to pay back the loan. The Promissory Note will spell out the terms of the loan, interest rate, length of the loan, payment intervals, if you will incur an early payment penalty or not and all of the other information that makes up the conditions of the loan. The note also says that your home will be used as collateral on the loan. It also will say what happens if you are unable to meet the terms of the loan. The note says your lender can take back the house as settlement for what is owed.

4. The Security Instrument

The loan will also require you to sign either a mortgage or a deed of trust. These documents also pledge the home as security for the loan. This document will also state the way the home will be used,

Owner-occupied means just that, the owner needs to live in the house as their primary residence for at least a year. After a year, you can rent it out.
Second home, then it can’t be a rental and you must have another home as your primary residence.
Non-owner occupied classification will allow you to rent out the house. (Interest rates are usually higher on non-owner-occupied homes.)

Problems with TRID

One of the biggest issues with TRID is adding time to the real estate transaction. The standard time period for a transaction has been increased from30 to 45 days. Some lenders say they can still close a transaction in 30 days with tight timelines, like inspection within a day or 2 of signing papers and appraisal soon after.

Although TRID that has been said to cause some problems the majority of buyers find it helpful as it clearly lays out their costs and expenses.

Get Educated For Home Buying Confidence

The home buying process can be a little intimidating, so make sure you know as much as you can going into the process, learn about the loan process before you make a purchase. A home is often the largest you will ever make. Educating yourself gives you more confidence and assurance you are making good decisions.

Working With Your Realtor And Lender

Choose and use your real estate agent wisely. They can answer any questions you may have and if they don’t have the answers themselves they know where to find them. Your agent will not only show you homes that are for sale but have knowledge about the market conditions, and what constitutes a good deal or an overpriced home. They can explain the basic process of buying a home and getting a loan. Your lender will elaborate on the loan process and will help you find the best deal on a loan.

Taking out a mortgage is a big deal. It involves a large sum of money and a complex process that can be a bit perplexing to the average fist time home buyer. This is where a great real estate and can help you make sure you are making the best and most educated decisions for yourself and your family’s future.

To find out what documents you will need to gather to show your lender to get a mortgage click here.

Want to buy a new home, but need to sell first?

September 7, 2015 by Michael Eisenberg

Want to buy a new home, but need to sell first? Planning and timing are critical to a smooth transaction, here are 7 steps to accomplish it.

Planning and timing are critical to a smooth transaction, when you want to buy a new home, but need to sell first, here are 7 steps to accomplish it.
1: How Much Do You Qualify For?
Get in touch with a your preferred lender to make sure that you need to sell your present home in order to get financing to buy your next home. You may be surprised to find that you don’t have to sell your home to buy another one. If you do qualify to buy a new home without selling your the one you are living in, you will have more options open to you meaning more flexibility.
2: Have Your Realtor Prepare A Net Sheet For Your Home
A net sheet will let you determine net figure you will put in your pocket after deducting all your closing costs when you sell your home. You will also want to get your Realtor to give you a good idea of what your home will realistically sell for (Don’t count on Zillow). Get a good Comparative Market Analysis. Remember the market is going to dictate the price of your home, not what you want or you need,. The amount you net will be determined by that realistic sale price and then deducting all of your closing costs. Now you will have a good idea of how much cash you have to use for the purchase of your new home, figure out how much of that can be used for a down payment.
3: List Your Home For Sale
Now your ready to put your home on the market. Start researching what is available in the online in the area you want to live in to familiarize yourself with what is available . Now is not the time to fall in love with a new home, it may not be on the market when you are ready to buy.
If you find a home you want to buy and yours is not under contract yet you would have to make a contingent offer, this means that your contract to buy your new home is contingent upon you finding a buyer for your house. Most sellers will not accept these contingent offers since they don’t know how long it will take for you to find a buyer. What if you’re home is overpriced or doesn’t sell?
Look at it from a sellers point of view. If they accept a contingent offer not as many buyers will be looking at their house, and if your doesn’t sell they could be missing out on time on the market and other potential buyers.
If you already have your house under contract that presents a different story, then you can start shopping.
Sellers are much more likely to accept an offer if your house is already under contract with a willing qualified buyer.

4: If Your House Is Getting lots of showings you may have an offer Coming Soon.
If you are getting 5-7 showings a week then you should be very close to getting something. If you are getting more than 10 showings a week chances are very good you will get an offer soon. If you are not getting any showing, than either your marketing or price is too high or your marketing is not working. It’s usually to high a price and you it’s most likely time for a price change before your home sends to much time on the market.
5: You Accept An Offer On Your House
Now that you have a mutually accepted offer and a contract to sell your home youare ready to ger serious about finding your new home.. You will want to negotiate a longer closing date like 60-90 days from the date of acceptance.
There are 2 big reasons for this.
1. You need to allow time to find your new home so you don’t end up settling on something you aren’t excited about. Buying your new home takes time. You need to have an apply for financing, have an inspection, and then wait for your financing to be fully approved. With new government regulations for lenders starting in October 45 days from a contract acceptance is being recommend, but this can vary based upon your lender. If your closing date is 60-90 days from the time you accept a contract, that should allow you about 3 weeks of time to find a new home. If you find a home in those 3 weeks, you still have 45+ days to close on your next home purchase!
2. The buyer of your home needs to do their due diligence. Here in Washington your buyer will have 10 days to do an inspection and any other due diligence so they know everything they are buying. If you are part HOA, buyers will request all association documents to make sure it’s in good standing and they can abide by the ccr’s. If the buyer doesn’t like something they can still walk away from your house, they can still cancel the contract. If that happens then it would surely affect your upcoming purchase. In the best case scenario the buyer would have already done all their inspections before you have an inspection on your new home.
6: Find Your New Home And Get Contract Accepted!
When your buyers clears the inspection on your home it’s time to get your new home under contract. You may have simultaneous closing or are closing both house on the same day. Your lender will need to be sure that your old loan has been paid off before they will clear the funds to buy a new home. The title company will handle all the details for you.
The timing is not as critical if you have some temporary housing situation set up, but if not you want to follow this plan exactly. Another option would be to see if the buyer on your home would be willing to lease it back to you for a few days so that you can close on your new home without being rushed.
Be Sure Your Buyer’s Lender Is Taking Care of Everything On Their End
You’ll want to be sure your buyer’s lender is taking care of all the details on their end. Make sure their appraisal is done as soon as possible after the inspection..
Your buyer will most likely have a mortgage contingency in their contract, meaning that the contract is contingent upon the buyer securing financing, in our contract here in Washington this is usually a 30 day contingency, after day 30 it gets complicated, the seller than has a right to give the buyer a notice that they can cancel the contract any time within 3 days of giving such notice, unless the buyer releases the contingency. Your buyer will receive a clear to close from their lender before closing. In a perfect world you want your buyer’s financing to be 100% approved 2 weeks or more before the closing date.
7: Close on Both Houses
You can see the amount of coordination and planning it takes to a sell and buy a new home. There is a good chance of lots of moving parts. Good planning will help avoid problems.