The Five-Step Loan Process
There’s a lot involved when you get a mortgage loan. You wouldn’t be visiting our site if it were possible to complete a one-page loan app and get an excellent loan check mailed out to you the same day. We do the heavy lifting, the nit-picky details, and comply with all State and Federal Laws, so you can concentrate on what’s important — The happiness of your family.
There are five main steps to get a mortgage loan.
Step One: Determine how much you can borrow
A couple of factors determine this amount.
How much of a monthly payment can you afford?
What is the maximum you can borrow from a lender, given your income and credit history?
We can get a good idea of your preferred payment amount – just call me and we can figure it out. 760-579-9519. Based on standard lender guidelines, we’ll get you a good idea of what kind of terms and loan program from which you can expect to benefit. Please be aware that we are not going to push you to “buy the biggest home you can afford.” Instead, we will determine the most comfortable payment for you and your family, so you can also enjoy being and adventuring together.
Step Two: Pre-qualify for your loan
Share your employment, assets, and residence history. We will get your credit report and score (only after you give your permission, of course). We pull it all together and give you a pre-qualification letter. Your agent will use this to make the best offer on the home you choose. This DU gives you buying clout! So while you shop for your new house, we’ll find you the best loan program for your situation.
Step Three: Apply for your loan
After you’ve made your offer and the sellers sign it, you will apply for your loan, open escrow, get an appraisal, and start packing! During the Application process, your Lender may require additional documentation or letters of explanation. We’ll sort that for you and let you know what you’ll need to get (if we can’t get it on your behalf).
Step Four: Funding
Escrow is open and the behind-the-scenes work is well underway. We’ll coordinate with the escrow company to ensure all the papers your lender needs are in order, and you’ll probably sign your heavy stack of documents at their office. Since you don’t need to worry about this coordination, you get to think about paint colors, new carpet, water reduction landscaping, and all the other fun details of moving into a new house.
Step Five: Celebrate, be Grateful, and Refer
You’ll have spent about 20-40 hours on your loan – gathering your submission criteria and conditions, and signing. Meanwhile, your team will have spent 200 hours… or more! Enjoy your new home, enjoy your family, invite over your friends. And tell them all about Bless this Address, so we can help them, too! Thank you, thank you, thank you!
Other Loans
When deciding what type of loan is best for you, it is important to consider how you will use the money and how you intend to pay it off. Do you need money in one lump sum or intermittent over several months or years? Do you want a fixed interest rate so you can repay your loan in precise monthly installments or would you rather have the flexibility to make any size payment above the interest-only minimum? In today’s competitive market, there are many options available. We will help you find the right mortgage product for your family, lifestyle, and financial needs.
Which Refinancing Program is Right for You?
When you are overwhelmed with so many choices, it may seem like there are even more refinance loan programs than applicants! Contact us at 760-579-9519 and we’ll work with you to qualify you for the best refinance program for your situation.
What is your primary goal?
“Lower my Payments”
Are your refinance goals to lower your rate and consequently your mortgage payments? Then a low, fixed rate loan may be your best option. Maybe you now have a fixed-rate mortgage with a higher rate, or perhaps you hold an ARM — adjustable rate mortgage — where the interest rate varies. Even if rates rise later, unlike with your ARM, when you close a mortgage with a fixed rate, you set that low rate for the term of your loan. This is especially a good choice if you don’t think you’ll be selling your home within the next five years or so. But if you do plan to move more quickly, you may want to consider an ARM with a low initial rate in order to achieve reduced payments.
“Cash Out with a Refinance”
Are you planning to cash out some of your equity in your refinance? Your home needs renovating; your daughter if on to college and needs help with tuition; or you are taking your family on a cruise. In these cases, you’ll apply for a loan that is more than the remaining balance of your present mortgage. If you’ve had your current mortgage loan for quite a while and/or have a high interest mortgage, you might be able to do this without increasing your mortgage payment.
“Consolidate my Debt”
Do you have other debt that you’d like to pay off? Any debt with higher interest (such as credit cards or vehicle loans), can be paid off with a lower interest rate through your refinance, if you have the home equity to make it work. And if debt is a recurring issue for you, ask us how to help reign that in.
“Build up Equity More Quickly”
Do you need to build up equity quicker, or have your mortgage paid off more quickly? You may be interested in refinancing into a short term mortgage – such as a ten or fifteen-year loan. You will be paying less interest over time while increasing your home equity more quickly. Your mortgage payments will likely be higher than you have been paying, but the monies paid toward interest can be tens of thousands less! You may also be able to refinance into a shorter-term loan with a lower monthly mortgage payment, but only if your long term loan was closed a while ago, and the balance remaining is somewhat low. To help you understand your options and the multiple benefits of refinancing, please contact us at 760-579-9519. We can help you reach your goals!
Second mortgages
Taking out a second mortgage on your home used to carry some stigma with it – a sign that you were in financial trouble. But today, the ability to borrow money against your property is considered one of the biggest advantages of owning a home. A second mortgage is essentially a loan secured by your home or another piece of property with a first mortgage. The second mortgage allows the homeowner to tap into his or her equity to pay for college tuition, essential home improvements, pay off credit card balances or other pressing financial needs.
Because there is more risk involved with a second mortgage, the lender’s conditions are usually more stringent, the term is shorter and the interest rate is higher than for the first mortgage. In the event of default, the holder of the second mortgage is subordinate to the first.
To qualify for a second mortgage, your credit must be in good standing and you must be able to document your income. An appraisal will be required on your home to determine the home’s market value.
By definition, a second mortgage is any loan that involves a second lien on the property, but you generally have two options: a home equity loan or a home equity line of credit.
Both options combine your first and second loan, so your loan will be limited to 75 to 80 percent of your home’s appraised value. With a home equity loan, you borrow a lump sum of money to be paid back monthly over a set time frame, much like your first mortgage. However, the closing costs (often 2-3 percent of loan amount) are often higher than your first mortgage and the rate – usually fixed – is also higher.
A home equity line of credit (HELOC) is an open line of credit tied to an equity-based maximum loan amount. You may use the account for a set period of time (5, 10 or even 20 years) as long as there are funds. Once your predetermined time period is up, you will be required to pay off the loan, making monthly payments on the principal and interest. The interest rate can fluctuate month to month on a home equity line of credit, which makes this option appealing when interest rates are low, but risky when interest rates increase.
What is a HELOC?
A home equity line of credit (HELOC) can be helpful when you are looking to borrow a lump sum to renovate your home, make a big purchase, or consolidate debt. A kind of revolving credit, a HELOC is secured by the equity in your home. This open-ended loan may be be charged up or paid down over the loan term. The loan interest usually fluctuates every month
Your lender will specify your credit limit (the largest amount you may borrow) with the HELOC. In setting your credit limit, your salary, outstanding debt, credit history and other monetary circumstances will be reviewed. In order to assess your home’ current market value, you’ll need an appraisal on your home. Your credit limit will be determined considering all of your financial information, in addition to a percentage of your property’s appraised market value, which is then subtracted from the balance owed on your existing mortgage loan.
VA Loans
VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. We’ve worked with some Veterans who were not aware of this program, but when they utilized it, they saved thousands of dollars in out-of-pocket fees. In most cases, no down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans.
Other benefits of a VA loan include:
- Negotiable interest rate
- Closing costs comparable – and sometimes lower – than other financing types
- No private mortgage insurance requirement
- Right to prepay loan without penalties
- Mortgage can be taken over (or “assumed”) by a new buyer when the home is sold
- Counseling and assistance are available to veteran borrowers having financial difficulty or facing default on their loan
Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount.
A VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors, or other energy-efficient improvements approved by the lender and VA.
Veterans can apply for a VA loan with any mortgage lender that participates in the VA home loan program. A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan. To find out if you have a Certificate of Eligibility, please contact us directly at 760-579-9519.