The ABC's of Working With a Local Mortgage Lender

When looking for a mortgage lender, consider someone who is local because they might have the best understanding of your needs. Here are the things to keep in mind when considering who to hire.


A. Consider the value of using a local lender who is right there in the community. This increases the level of accountability to you as a customer when dealing with your specific loan.

If something goes wrong you have a person to connect with, someone who has been working with you during the entire process and with whom you can speak directly.


B. Consider the advantage to you of the local mortgage lender's unique understanding of the local real estate market.

They might know enough about a market to dispute low comparable sales to establish value for your home loan.
They might know about special down-payment assistant programs offered through local government agencies. If you don’t think this matters, think again!


C. Consider the local mortgage lender's ability to cut down on a lot of the hassles and frustrations that typically go along with the mortgage process. Working with somebody who is in your local community virtually ensures that there will be far less in the way of miscommunication or misunderstandings regarding important details of your mortgage application. When you work with a ‘national’ lender you simply become a number. If there is something wrong with your file it will go to the bottom of your underwriters huge stack of mortgage files.


D. Rely on their desire to maintain their local reputation to help make things work for you. Working with somebody who lives in your community has the advantage of guaranteeing that they will do what they can to make sure you are a happy customer. All it takes is a deeply dissatisfied customer to start talking about a local lender for that lender to run into problems. Reputation is everything and local lenders have a tendency to go the extra mile to keep their customers happy.


E. Use the flexibility that a local lender has. Very few people realize that a local lender often has more flexibility with regard to getting you the best rate than some national organizations do. There are a variety of reasons why this is the case, but the main thing to realize is that you are not putting yourself at any kind of disadvantage in getting the best rate possible by choosing to work with a local lender in your community.


F. Appreciate the personal contact. When you work with a local lender you’re dealing with somebody who you can go and see in person. Given how complicated and confusing the mortgage application process can sometimes be, being able to sit down with somebody face-to-face is a tremendous advantage to you that you simply cannot get with some national lenders.





source of article calimortgageloan

PRE-QUALIFIED VS. PRE-APPROVED-WHAT'S THE DIFFERENCE?

Without good preparation, many buyers get lulled into the mistaken notion that if a lender pre-qualifies them for a mortgage this means that they have been pre-approved for a home loan. Unfortunately, there's a world of difference between these two terms. If you've ever been confused by the two, we'll bring you up to speed on how these terms differ - and why a misunderstanding can mean disaster for borrowers.

WHAT DOES "PRE-QUALIFIED" REALLY MEAN?
Getting pre-qualified is the initial step in the mortgage process, and it's generally fairly simple. You supply a bank or lender with your overall financial picture, including your debt, income and assets. After evaluating this information, a lender can give you an idea of the mortgage amount for which you qualify. Pre-qualification can be done over the phone or on the internet, and there is usually no cost involved. Loan pre-qualification does not include an analysis of your credit report or an in-depth look at your ability to purchase a home.

The initial pre-qualification step allows you to discuss any goals or needs you may have regarding your mortgage with your lender. At this point, a lender can explain your various mortgage options and recommend the type that might be best suited to your situation.

Because it's a quick procedure, and based only on the information you provide to the lender, your pre-qualified amount is not a sure thing; it's just the amount for which you might expect to be approved. For this reason, a pre-qualified buyer doesn't carry the same weight as a pre-approved buyer who has been more thoroughly investigated.

WHAT DOES "PRE-APPROVED" REALLY MEAN?
Getting pre-approved is the next step, and it tends to be much more involved. You'll complete an official mortgage application (and usually pay an application fee), and then supply the lender with the necessary documentation to perform an extensive check on your financial background and current credit rating. (Typically at this stage, you will not have found a house yet, so any reference to "property" on the application will be left blank). From this, the lender can tell you the specific mortgage amount for which you are approved. You'll also have a better idea of the interest rate you will be charged on the loan and, in some cases, you might be able to lock-in a specific rate. With pre-approval, you will receive a conditional commitment in writing for an exact loan amount, allowing you to look for a home at or below that price level. Obviously, this puts you at an advantage when dealing with a potential seller, as he or she will know you're one step closer to obtaining an actual mortgage.


The other advantage of completing both of these steps - pre-qualification and pre-approval - BEFORE you start to look for a home is that you'll know in advance how much you can afford. This way, you don't waste time with guessing or looking at properties that are beyond your means. Getting pre-approved for a mortgage also enables you to move quickly when you find the perfect place. When you make an offer, it won't be contingent on obtaining financing, which can save you valuable time. In a competitive market, this lets the seller know that your offer is serious - and could prevent you from losing out to another potential buyer who already has financing arranged.

Once you have found the right house for you, you'll fill in the appropriate details and your pre-approval will become a complete application.

GET COMMITTED
The final step in the process is what's called a "loan commitment", which is only issued by a bank when it has approved you, the borrower, and the house in question. This means the home should be appraised at or above the sales price. The bank may also require more information if the appraiser brings up anything he or she feels should be investigated (i.e. structural problems, accessibility issues, outstanding liens or litigation in progress). Your income and credit profile will be checked once again to ensure nothing has changed since the initial approval.

A loan commitment letter is issued only when the bank is certain it will lend, so the commitment date on your purchase contract should be closer to closing than to the date of your offer.


Pre-approved and pre-qualified are not the same thing, so don't assume that the bank will provide your loan until you have the former. The mistake could cost you your new home!

Ralph Waldo Emerson, American essayist and poet, once said that the future belongs to those who prepare for it. This is sage advice for home buyers who need to lay the necessary groundwork to buy the home of their dreams. by Brian O'Connell

5 Questions to Ask Yourself Before You Start Your Home Search

1. Have I had a stable, uninterrupted job history for the last six months or longer?

2. Do I know my credit score? Is it 620 or higher?

3. Do I pay my bills on time? Have I had any late payments in the last twelve months?

4. Do I have a savings account or can I come up with 3.5%- 5% down payment of my purchase price? OR do I have a source of "gift money"?
There are, of course, exceptions to this.

5. Is your debt greater than 40% of your gross income?



We will be happy to answer any questions you have. Just call us. We will be glad to refer you to a lender.

We are TEAM RED. We are seasoned professionals and are here to help you get started. We are dedicated to helping you, not only begin your home search and find the perfect home for YOU, but to see you through the entire Home-Buying process.

Please don't hesitate to call either of us. WE are CATHY and FRANK, TEAM RED. Call us. 205-572-2557 or 205-335-5554.

How a New Car Payment Reduces Your Purchase Price

For example, suppose you earn $5000 a month and you have a car payment of $400. Using an interest rate of 8.0%, you would qualify for approximately $55,000 less than if you did not have the car payment. Even if you feel you can afford the car payment, mortgage companies approve your mortgage based on their guidelines, not yours. Do not get discouraged, however. You should still take the time to get pre-qualified by a lender. Next, you contact a loan officer to get prequalified for a mortgage loan. You state your desired price and how much you can put down. You provide your income and may even supply pay stubs and W2 forms. The loan officer methodically crunches the numbers (by telephone, in person, or even over the internet). However, if you have not already bought a car, remember one thing. Whenever the thought of buying a car enters your mind, think ahead. Think about buying a home first. Buying a home is a much more important purchase when considering your future financial well being. Do not buy the car. Buy the house first.

Debt-to-Income Ratios

You see, when determining your ability to qualify for a mortgage, a lender looks at what is called your "debt-to-income" ratio. A debt-to-income ratio is the percentage of your gross monthly income (before taxes) that you spend on debt. This will include your monthly housing costs, including principal, interest, taxes, insurance, and homeowner’s association fees, if any. It will also include your monthly consumer debt, including credit cards, student loans, installment debt, and…. …car payments.

NEW HOUSE OR NEW CAR?

When you get a raise or accumulate some savings, you may find yourself confronted by an innate instinct of modern civilized men and women. The desire to spend money. It begins simply, by going out to restaurants, then accelerates to purchasing clothing, electronic gadgets, and since North Americans have a special fondness for the automobile, you may even buy a "brand new car." If you're married or ambitious, a few months later your thoughts eventually turn toward buying your own home. Or a move-up home, if you are already a homeowner. Next, you contact a loan officer to get prequalified for a mortgage loan. You state your desired price and how much you can put down. You provide your income and may even supply pay stubs and W2 forms. The loan officer methodically crunches the numbers (by telephone, in person, or even over the internet).