Category: Mortgage (Page 3 of 54)

How Long Does It Take to Get a Mortgage?

July 9, 2024 / Tom Bonetto

I’m asked regularly about mortgage related time-frames…as sometimes clients need to close their transactions quickly.

Instead of getting conditionally approved in a few days (or even 24 hours – like what was happening about 15 years ago), loans are thoroughly processed before even landing on the underwriter’s desk.

Because there are a ton of regulations and timelines lenders have been forced to work with, the average loan closing will take anywhere from 20 to 40 days, depending on many circumstances.

This means the actual loan approval might take a couple weeks, but it will generally be a firm one with few if any remaining conditions.

Interestingly, around the mid-to-late 2000s, mortgages could close really quickly. This was partially because underwriting guidelines were much more flexible (and some might say ‘non-existent’), and also because lenders were well-staffed and very competitive.

However, those days have changed, due to a myriad of factors.

The Pre-Qualification in Key

In order for a real estate agent to best help you find that right home, it’s vitally important to know how much “house” you can afford. That’s why you should reach out to the right Mortgage Professional first, before you contact an agent and start looking at houses.

Your chos en lender should sit down with you to assess your goals and objectives – and then help you choose the optimal loan program that best fits your needs. The first step in this process is the pre-qualification.

Home sellers and their real estate agents generally insist that home buyers submit a valid pre-qualification letter along with their initial offer for the home.

Essentially, sellers don’t consider offers from people who haven’t taken the time to determine if they can even get approved for a loan in the first place.

You can find out more on pre-qualifications here…

Why Do Mortgages Take So Long?

Many different parties are involved in the mortgage and/or home buying transaction
There are regulated timelines that must be followed
The home appraisal can also take up to a few weeks to be completed

Like most things in the mortgage world, it’s difficult to generalize because every loan (and every borrower) is uniquely different. With that said, here are a few reasons why the loan process takes a bit:

So it’s best to be patient and cooperative to ensure a smooth closing!

Complex and Elaborate

The mortgage process is very involved and requires a lot of hands to touch the loan before it actually closes.

We’re talking a loan officer, an underwriter, a processor, an appraiser, a title company, escrow company, an insurance company, a funder, a closer, and possibly more. That’s a lot of hands in the dough!

The same goes for mortgages.

Even in a best-case scenario…say you are a well-qualified borrower with a W-2 job, one bank account, and with excellent credit score with no recent activity…even refinancing a conforming loan, can still take several weeks.

Appraisals

Sometimes, the delay can be due to the home appraisal, which is essentially required to independently determine the value of the property in question.

Lenders will not lend if they don’t know the value of the property, so they will to order an appraisal. This process can take 5 to 10 days, depending upon the schedule of the appraiser.

This is why lenders will often want to book the appraiser early on so they can get it done and delivered to underwriting.

In Conclusion

The mortgage process isn’t the quickest, but that really can help buyers make sure the loan they are qualified for AND the property they are buying are the right fit.

I’ve done loans in as quick as 17 days, so if you are looking for an usually quick close, let me know and I’d love to help!

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

6 Ways to Improve Your Chances of Qualifying for a Mortgage

June 24, 2024 / Tom Bonetto

It can seem like a daunting task to actually qualify for a mortgage. But really, that’s not the case, as it absolutely can be done!

With that said, being well-prepared can significantly improve your chances of approval.

Here are six ways to enhance your prospects:

1. Improve Your Credit Score

Your credit score is a major factor in mortgage approval. Lenders use it to gauge your reliability as a borrower. To improve your credit score:

Pay all bills on time, as punctuality has a significant impact on your score.
Reduce outstanding debt, particularly credit card balances.
Avoid opening new credit accounts close to your mortgage application date.
Check your credit report for errors and dispute any inaccuracies. A higher credit score not only increases your chances of approval but also helps you secure a better interest rate.

2. Save for a Down Payment

A substantial down payment can strengthen your mortgage application. It reduces the loan amount and demonstrates your financial responsibility.

If you are able, try to save 20% of the home’s purchase price to avoid private mortgage insurance (PMI) and lower your monthly payments. But even if you can’t reach 20%, a larger down payment still improves your application’s appeal by lowering the loan-to-value ratio (LTV).

Fortunately, in today’s environment, there are great low down-payment options available. Find out more here…

3. Stabilize Your Employment and Income

Lenders look for steady employment and consistent income. To enhance your mortgage approval prospects:

Maintain stable employment, ideally with the same employer, for at least two years.
Document all sources of income, including bonuses, overtime, and secondary employment.
Avoid making significant career shifts close to your application. A stable employment history reassures lenders of your ability to meet monthly mortgage payments.

4. Reduce Your Debt-to-Income Ratio (DTI)

Your debt-to-income ratio compares your monthly debt payments to your gross monthly income. To improve your DTI:

Pay down existing debts, focusing on high-interest loans and credit cards.
Avoid taking on new debt before and during the mortgage application process.
Increase your income through a side job or additional work hours, if feasible. A lower DTI indicates to lenders that you have sufficient income to manage your mortgage payments alongside other obligations.

5. Gather and Organize Financial Documentation

Lenders require extensive documentation to assess your financial health. Be prepared to provide:

Recent pay stubs, W-2 forms, and tax returns.
Bank statements for checking, savings, and investment accounts.
Documentation of any additional income sources, such as rental income or alimony.
A list of all monthly debt payments and living expenses. Organizing these documents ahead of time can streamline the application process and demonstrate your preparedness and financial responsibility.

6. Get Pre-Approved for a Mortgage

Obtaining pre-approval from a lender shows that you are a serious buyer and gives you a clear understanding of your borrowing capacity.

To get pre-approved:

Submit your financial documentation for an initial review by the lender.
Discuss your financial situation and home-buying goals with the lender.
Obtain a pre-approval letter that specifies the loan amount you qualify for. Pre-approval not only boosts your credibility with sellers but also helps you stay within your budget and avoid falling in love with a home you cannot afford.

In Conclusion

Of equal importance is to have the right mortgage lender with you during this process. I can help walk you through these steps and coach you along the way! Do reach out to me for more…

The Top 9 Mortgage Mistakes To Avoid

June 11, 2024 / Tom Bonetto

Navigating the mortgage process can be challenging, especially in today’s environment.

Making the right decisions is crucial to avoid common pitfalls that can lead to financial strain or missed opportunities.

Here are the top 9 mortgage mistakes to avoid:

1. Not Checking Credit Reports and Scores

Failing to review your credit reports and scores before applying for a mortgage can result in unpleasant surprises. Errors on your credit report or a low credit score can lead to higher interest rates or even loan denial.

Ensure your credit is in good shape by correcting errors and paying down debts before applying.

2. Not Getting Pre-Approved

Skipping pre-approval can leave you unprepared in a competitive housing market. A pre-approval letter shows sellers you are a serious buyer and gives you a clear idea of how much you can afford, streamlining your home search and negotiation process.

3. Choosing the Wrong Mortgage Type

Different mortgages have varying terms and conditions. Failing to understand the differences between fixed-rate, adjustable-rate, FHA, VA, and other loan types can result in higher costs over time.

Research and choose a mortgage that fits your financial situation and long-term plans.

4. Ignoring Additional Costs

Only focusing on the principal and interest payments is a common mistake. Homeownership includes property taxes, insurance, maintenance, and possibly private mortgage insurance (PMI).

Calculate these additional costs to ensure your budget can handle the total expense.

5. Making Major Financial Changes Before Closing

Avoid making significant financial changes, such as switching jobs, taking out new loans, or making large purchases, before your mortgage closes. Lenders recheck your financial status before final approval, and such changes can jeopardize your loan.

6. Overextending Your Budget

Qualifying for a mortgage doesn’t mean you should borrow the maximum amount offered. Consider your overall financial health and future expenses.

A mortgage that stretches your budget too thin can lead to financial stress and difficulties in managing other obligations.

7. Overlooking Loan Terms and Conditions

Not fully understanding the terms and conditions of your mortgage can lead to costly mistakes. Read the fine print and ask questions about any unclear terms, such as prepayment penalties, adjustable-rate terms, or the implications of late payments.

8. Skipping the Home Inspection

Foregoing a home inspection to save money or expedite the purchase can backfire. An inspection can uncover hidden issues that might require costly repairs.

Use the inspection results to negotiate with the seller or reconsider the purchase if significant problems are found.

9. Ignoring Refinance Opportunities

Once you have a mortgage, staying complacent can be a mistake. Regularly review your mortgage terms and market conditions.

Refinancing when interest rates drop can save you money, but be mindful of the costs involved to ensure it’s a financially sound decision.

In Conclusion

Avoiding these common mortgage mistakes requires careful planning, thorough research, and staying informed throughout the home-buying process. Make sure to team up with the right mortgage lender to walk you through the process.

By taking proactive steps to manage your credit, budget, and loan options, you can secure a mortgage that aligns with your financial goals and helps ensure a stable and sustainable homeownership experience.

Most importantly, d o reach out to me for help!

The Importance of the Home Inspection

May 25, 2024 / Tom Bonetto

Home inspections are a critical step in the home-buying process, offering buyers a detailed assessment of a property’s condition.

These evaluations provide valuable insights that can affect purchasing decisions, safeguarding that buyers make informed choices.

Hidden Issues

Firstly, home inspections are essential because they uncover hidden issues that may not be visible during a casual viewing.

Many potential problems, such as structural damage, plumbing issues, or electrical faults, can go unnoticed without a thorough inspection. A professional home inspector examines every aspect of the property, identifying defects that could require significant repairs.

By revealing these issues early, buyers can avoid unexpected expenses and make better-informed decisions about whether to proceed with the purchase.

Negotiation Opportunity

Home inspections can also provide buyers with valuable leverage during negotiations.

If the inspection report highlights significant defects or necessary repairs, buyers can use this information to negotiate a lower purchase price or request that the seller address the issues before closing.

This negotiation power can result in substantial savings or improvements that enhance the property’s value, making the investment more worthwhile.

Ensuring Safety

The overall safety of the home is another critical reason for conducting inspections.

Inspectors check for safety hazards such as faulty wiring, mold, asbestos, or radon gas, which can pose serious health risks to the occupants. Identifying these dangers before purchasing allows buyers to make informed decisions about their safety and well-being.

It also provides an opportunity to address and mitigate these hazards before moving in, ensuring a safer living environment.

Valuation Help

Moreover, a home inspection helps validate the property’s value. The inspection report offers an objective assessment of the home’s condition, which can confirm whether the asking price is reasonable.

If the inspection reveals that the property is in excellent condition, it can justify the price and give buyers confidence in their investment. On the other hand, if significant issues are found, buyers can reconsider the value proposition and potentially renegotiate the price or walk away from the deal.

Peace of Mind

Beyond the practical benefits, home inspections provide buyers with peace of mind.

Knowing that a professional has thoroughly evaluated the property reduces the uncertainty and stress associated with buying a home. This assurance allows buyers to move forward with greater confidence, knowing that they have made a well-informed decision.

The peace of mind gained from a home inspection is invaluable, particularly when making such a significant financial commitment.

Planning for Future Expenditures

Finally, home inspections facilitate future planning for buyers. The inspection report not only identifies current issues but also provides insights into potential future maintenance needs.

Understanding the condition of major systems and components, such as the roof, HVAC system, and foundation, allows buyers to budget for future repairs and replacements.

This proactive approach helps buyers manage their investment more effectively and avoid surprises down the line.

In Conclusion

Home inspections are truly an indispensable part of the home-buying process. They uncover hidden issues, offer negotiation leverage, ensure safety, validate the property’s value, provide peace of mind, and facilitate future planning.

By paying up-front for a professional home inspection, buyers can make informed decisions, protect their health and financial interests, and plan for a secure and well-maintained home.

If you’d like to talk more about the steps involved in the home buying process, don’t hesitate to contact me!

Do You Need a Real Estate Agent When Buying New Construction?

May 20, 2024 / Tom Bonetto

Do you need a real estate agent when buying a newly built home? Can you just use the builder’s representative?

It’s important to understand that as a buyer, when you walk in a new construction site, that on-site agent that’s working in that model home does NOT represent the buyer. They’re representing the builder, and it’s their job to get the builder top dollar and under the best conditions.

The pros of using a real estate agent for new construction FAR outweigh the cons…and it’s not even close.

What Can Happen When You Visit New Construction Without a Realtor?

In many cases, if you visit a builder’s office by yourself, once you sign into a builder’s sales office without your own real estate agent, they may not allow you to have one.

As a buyer, you may be out of luck having a buyer’s agent represent your best interests.

Unfortunately, sometimes nothing is posted anywhere at the builder’s sales center that tells you this. It may be posted in multiple listing services (MLS), but only real estate agents will see it…and that doesn’t do you much good.

So, don’t sign your name or provide other contact information when you visit a new construction development if you are going there without your real estate agent. Instead, speak with your agent regarding new construction. Have them accompany you on your visit to the builder’s site.

Having your real estate agent with you will be one of the smartest things you can do as a buyer.

Negotiations

Negotiation is critical area where real estate agents prove their value.

Purchasing a new home often involves negotiating with builders and developers, who typically have their own interests at heart.

Real estate agents are skilled negotiators, adept at securing favorable terms for their clients. They can negotiate on various aspects, such as upgrades, closing costs, and warranties, ensuring that buyers get the best possible deal.

Their ability to navigate these discussions can result in significant savings and added benefits for buyers.

Legal Issues

Moreover, the legal complexities involved in purchasing a new home absolutely necessitate the involvement of a real estate agent.

The process includes numerous legal documents and contracts that require careful review and understanding. Real estate agents are familiar with these legalities and can ensure that all paperwork is completed accurately and in compliance with regulations.

They will help identify any potential issues or red flags in contracts, protecting buyers from future legal disputes and financial liabilities.

True Value

Real estate agents offer invaluable expert guidance throughout the home-buying process.

For many buyers, purchasing a new home can be overwhelming, filled with unfamiliar terminologies and procedures. A seasoned real estate agent brings extensive experience and knowledge, ensuring that buyers understand every step.

From selecting the right neighborhood to navigating the intricacies of builder contracts, agents provide clarity and direction, preventing potential pitfalls that could arise from a lack of understanding.

In Conclusion

Utilizing a real estate agent when purchasing a newly built home is essential for multiple reasons.

Their guidance, negotiation skills, and legal assistance are just a few of the many values that they bring to the table. By leveraging the expertise of their real estate agent, buyers can make better decisions, secure superior deals, and navigate the complex process with greater confidence and ease.

How Long Does It Take to Get a Mortgage?

The Pre-Qualification in Key

Why Do Mortgages Take So Long?

Complex and Elaborate

Appraisals

In Conclusion

6 Ways to Improve Your Chances of Qualifying for a Mortgage

1. Improve Your Credit Score

2. Save for a Down Payment

3. Stabilize Your Employment and Income

4. Reduce Your Debt-to-Income Ratio (DTI)

5. Gather and Organize Financial Documentation

6. Get Pre-Approved for a Mortgage

In Conclusion

The Top 9 Mortgage Mistakes To Avoid

1. Not Checking Credit Reports and Scores

2. Not Getting Pre-Approved

3. Choosing the Wrong Mortgage Type

4. Ignoring Additional Costs

5. Making Major Financial Changes Before Closing

6. Overextending Your Budget

7. Overlooking Loan Terms and Conditions

8. Skipping the Home Inspection

9. Ignoring Refinance Opportunities

In Conclusion

The Importance of the Home Inspection

Hidden Issues

Negotiation Opportunity

Ensuring Safety

Valuation Help

Peace of Mind

Planning for Future Expenditures

In Conclusion

Do You Need a Real Estate Agent When Buying New Construction?

What Can Happen When You Visit New Construction Without a Realtor?

Negotiations

Legal Issues

True Value

In Conclusion

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