Mortgage Lending Made Simple

Here is a tip for all my readers who currently have a VA Loan that is more than 12 months old. You can refinance to lower your rate and payment . The program has much lower Closing Costs, NO NEW APPRAISAL is required, No Credit Report ( your must have made the last 12 payments on time) and your Funding Fee is only 0.5% which can be rolled into your loan. If you would like to know more about this program please contact me and I will be happy to provide you information on how to take advantage of this process. You can contact me through the contact form or by emailing me at ned@nedhilldrup.com

I would encourage anyone who is having a problem making their mortgage payments or who anticipates they may in the future, for what ever reason, to contact their Lender today.   Don’t wait until you are several months behind.  The best way to save your credit and your home is to be pro-active.    In more than 60% of the foreclosures that have occurred in the last year, the Borrower did nothing until it was too late.   The Banks, The Homeowners,  all of us have to work together to slow down, then end this Foreclosure Crisis.   If you are worried about the value of your home, nothing we can do will help improve that Market Value like ending the Foreclosure and Short Sales.

Banks are willing to work with borrowers as you can see from this recent article in The Charlotte Observer:

Faced with rising foreclosures among their customers, Charlotte’s big banks have been ramping up efforts to work with borrowers struggling to make their mortgage payments.  

Bank of America and  Wachovia are adding staff to work with homeowners and have restructured thousands of loans.  Bank of America is part of a national initiative that is offering to pause the foreclosure process for some borrowers.  

The moves come as banks face increasing pressure to help homeowners squeezed by the nation’s housing crisis. This week, more than 90 California community groups asked  Bank of America to halt foreclosures on troubled borrowers assumed in its planned purchase of  Countrywide Financial.

The percentage of U.S. mortgage loans in the foreclosure process hit 1.69 percent in the third quarter of 2007, the highest level ever, according to the latest data from the Mortgage Bankers Association. That’s about 767,550 loans. The housing malaise that started with subprime mortgages now threatens to stall the broader economy.  

Banks have a business interest in assisting homeowners. In recent quarters,  Bank of America and  Wachovia have had to set aside more money to cover bad loans, crimping profits. They make money collecting interest on loans, not owning foreclosed properties. And they don’t want to lose customers, who also use their checking accounts and credit cards.  

Read the entire article here.

It’s everyone nightmare. You find a great Realtor, you find the perfect home. The seller accepts the offer and you begin looking forward to moving into your new home — only to find out that you can’t qualify for the loan.

Fortunately, such situations are becoming less frequent, thanks to the growing popularity of loan pre-approval programs.

Anyone who wants to buy a new home in today’s market needs a mortgage unless you are one of those very lucky one who can write a check for that new home. For the rest of us mere mortals, who need a mortgage, make the whole process much easier on yourself and the professionals you will be using to help you achieve your dreams. Get a Pre-Approval, not just Pre-Qualified, and know that when you find that perfect home you will be able to negotiate the price from a position of strength. With a Pre-Approval Realtors and Sellers will give your offer a much more positive reaction.

Today, mortgage companies are strongly encouraging real estate agents to recommend that buyers be pre-approved before they start shopping for a home. In doing so, lenders and agents work together to protect everyone’s interests and drastically reduce the likelihood of a transaction failing for lack of buyer financing.

Before examining the benefits of loan pre-approval in greater detail, it’s important to understand the difference between pre-qualifying and pre-approval.

Pre-qualifying generally refers to a lender’s written opinion of the ability of a borrower to qualify for a home loan based upon a borrower’s statement of debt and income. The statement of debt and income may or may not be supported by documentation. In issuing the written opinion, the lender may or may not have reviewed the borrower’s credit report. As such, the prequalification is only an estimate and not a commitment to lend.

Pre-approval goes a step further than pre-qualifying. It is an actual written commitment to lend, subject to the condition that when the borrower is ready to buy, he or she still meets all the qualifying conditions that were met at the time of the conditional approval. This conditional approval occurs when the borrower submits a written loan application stating sources of income, employment, debt levels and credit history. The application for conditional approval is usually reviewed in the context of a certain loan amount and making assumptions about what the interest rate will actually be at the time the loan is actually made, as well as estimates for the amount that will be paid for property taxes, insurance and other costs. If all of the financial information can be verified, and the borrower meets the underwriting guidelines, the lender issues a commitment to lend for the pre-approved amount. This pre-approval is also conditioned upon the property, once chosen by the borrower, satisfying the lender’s underwriting guidelines.

Buyers who obtain pre-approved before working with a Realtor are showing their professional good sense for one simple reason. When the sales contract is signed, everyone involved will have a much higher comfort level that the loan will close. Also, Pre-Approvals result in much quicker closing.

Here are some key ways that pre-approved buyers are advantageous to everyone:

• You won’t waste time looking at houses that are priced too high or too low. Because you know how much home you can afford, you can target which homes and neighborhoods to look in.
• You may have better negotiating power with sellers. When given a choice between potential home buyers, sellers commonly feel more comforted accepting an offer from a buyer who has already secured financing.
• You know early on whether you will have problems closing. The general rule of thumb for lenders is “the more we know about the buyer earlier in the process, the better.” Pre-approval allows problems in a loan application to be addressed early. Since loan approval requires verification of items stated on the loan application, a pre-approved borrower can shop for a home while the lender simultaneously verifies financial information, saving anywhere from three days to several weeks in total processing time, once the purchase agreement has been signed.

In addition, pre-approved buyers become better educated about the lending process. The home financing process can be intimidating to anyone, but it is especially so for the first-time buyer. With pre-approval, the lender can begin educating the borrower early on about what will occur and what kind of information will be expected of them.

We all want a happy buyer who feels comfortable with the home buying process, not one who is full of doubts and anxieties. By obtaining a pre-approval early on in the process the buyer reduces their anxiety — or, better yet, potentially eliminate it before it occurs.

This site is still under construction. Please come back for more news and information on mortgage Lending from Ned Hilldrup. Ned will be going over the pros and cons of VA Home loans, FHA Home Loans, and discussing current issues in Mortgage Lending.

Please feel free to contact Ned with any questions or to request more information. He can be reached via the Contact Ned link or by clicking here.