Colorado Home Mortgage Loan

What is Credit?

 

This is the fist of three major qualifying components for a home loan: Credit, Income/employment/, Previous residency

 

Lender will review your credit report to determine credit worthiness.

 

Three major reporting agencies are: Experian, Transunion, and Equifax.  We use Credit Plus to order credit there are many vendors, but primarily the scores will be similar, but not always exactly the same. 

 

What’s on the credit report: Identifying information, Public information such as judgments or BK’s,  Account history for every account you have ever opened. 

 

Credit History will determine a FICO score: The top 5 things impacting credit scores on a credit report are:   Amounts owed on accounts are too high, Delinquency on Accounts, Too Few bank revolving accounts, too many accounts with balances,

 

Things that can help boost credit scores immediately:  Opt Out Prescreen, Authorized user on good accounts, pay down total balance on accounts to 35% of the high credit limit.  Pay off or eliminate debt on American Express cards they do not report a high limit only the current balance, Pay your accounts on time

 

 

Pre-Qualification Process

 

Shopping for the right loan will be as important as shopping for the right home; you should find out what you qualify for 1^st before actually going out and starting the buying process. 

 

Preapproval commitment from the lender can be achieved if in fact you go through the loan process first.  Sellers are more likely to accept offers with a preapproval letter then without.

 

It is important that you ask yourself a few questions before obtaining a Loan, these questions will help you and your loan officer determine the right program for you: 

 

How long do I plan to stay in this home?

Do I anticipate any income or debt changes in the near future?

How quickly do I want to pay my mortgage off or do you want to pay your mortgage off?

If I do decided to move out of this property do I plan on keeping it as an investment property?

 

Finally do you homework and be prepared to ask as many questions as you need to feel comfortable with the choice you are making.

 

Mortgage Process

 

There are several steps that need to be followed in the mortgage process but it can be easy.  We understand that this is a major step for you and your family and we take it very serious.  We will put you at ease

 

The fist step is to have a mortgage application appointment where the application is completed so that your loan officer can begin working on what programs best fit your situation

 

Typically a loan program is recommended at applications and you will be asked to sign the documentation at that time.  If you need more time we will accomidate your requests, however by signing the documentation you are not in any way tied to the paperwork being submitted to our lenders, nor are you required to use us for the transaction.  Signatures on the disclosures and applications allows us to obtain information from a variety of sources in order to provide you with the best loan options available in the market today.  We work for you and we do not forget that in the process, because you can fire us at will.

 

With the application we will collect a variety of standard qualify documents to prove the information on the application is accurate and true; W-2’s, tax returns, bank statements, current pay stubs, home owners insurance, asset information. Public information reports like bk or proof of judgment pay offs, divorce documentation, and other sources of income information

 

Once the signed documentation takes place and all supporting documentation is in place, we will shop the loan with all 92 investors currently signed up with us to see who is offering the best programs.  We are in a sense a travel agent for banks and these banks work hard to obtain our business by providing large incentives to us which we pass on to you in order to be competitive in this market.

 

The next step is to secure the loan program with a rate.  The rate will be determined by the market and will be explained in more depth in the rate section of the web site.  We will make float and lock recommendations daily, but ultimately you get to decide when to lock your rate.  We will do everything in our power to ensure you lock at the right time that maximizes your rate benefits. 

 

The entire loan packages is faxed or shipped out to the loan processing center located at the selected banking institution.  An underwriter is assigned where they review the file to ensure all supporting documentation is verified and accurate.  Their job is to prepare the file so that it can be portfolio’ed and sold in the secondary market.  Typically they will issue an approval with conditions and send it back to the loan officer or processor at the branch.  We will then contact you to gather the remaining components to complete your loan application in full.

 

The loan application is then again reviewed by the underwriter and hopefully all required documentation is in place, if not a new approval with conditions will be issued.  If the loan has all the appropriate information a Loan Commitment is generated and the loan application is sent to a closing department.

 

The closing department will be responsible for issuing the wire transfer that will ultimately be wired to the title company of your choice. 

 

Finally you will be given a closing date and closing time where you will be signing all of the final disclosures and application for loan approval.  Once the signing takes place the title company will issue all funds to the appropriate entities and your loan transaction will be complete.

 

Appraisal

 

An appraisal is done by a unbiased third party to assess value in the property.  The lender uses the appraisal in determining the maximum loan amounts offered to you.

 

The appraisal fee is typically paid to the appraiser at the time the appraisal is done and will normally require you to make this payment upfront.

 

The appraiser will view the home and take measurements to calculate size and features of the home.  They will also take pictures to show what condition the home is in.

 

Once the measurements are completed and all features analyzed the appraiser will then pull comparable sales normally within the last 90 days to start assessing the value of the home. 

 

These comparable homes are analyzed to determine like models and features that best relate to the subject property.  Once 3 or 4 comparable homes are determined the price for which these home sold for will be the starting point when assessing value to the subject property.

 

These comparable homes are broken down by all the features and amenities offered by each and simple reduction or additions are made to the subject property based on the differences found in each of these homes.  These differences will ultimately be calculated to create an even value for all the homes being compared.

 

A final value is determined and a full appraisal report is generated for the lender. A copy of this report will also be given to you at the time of closing or upon request.

 

It is important to remember an appraiser differs from a home inspector and will not inspect the house the same way.  A home inspection is highly recommended before purchasing a home.   

 

 

 

Title Insurance

 

Required by law and will vary in cost depending on which title company you use.

 

A new policy will be required anytime a new deed is filed which will be done on all loan transaction.

 

This will protect the lender and the home owner from any unresolved title issues that appear after the closing from circumstances that arose before closing.

 

For example:  Lets say you bought a home and the reason for buying that home was the beautiful landscaping throughout the property.  This landscaping could have been done recently on credit with th landscaping company.  If for some reason the previous owners default the likelihood that a lein be placed on your home is high.  The title Insurance would protect you in this situation