Do’s and Don’ts During the Mortgage Process

Mortgage Do’s and Don’ts!

Mortgage ProcessSo you are getting ready to purchase a home? Awesome! Okay, now you might be freaking out over the mortgage process because you’ve probably heard a dozen horror stories from close friends, Uncle Joe, your Cousin Rob and of course…Mom and Dad.

The reality is that getting a mortgage loan does not have to be an overwhelming process. We believe that if you follow some simple do’s and don’ts  that you may actually be able to…dare I say enjoy obtaining a home loan. Wait, what? Did I  really just say that you could actually enjoy the mortgage process? I think I did. Okay, allow me to clarify.

With the right mortgage team (insert shameless plug) making sure that your loan is originated correctly and that all of your bases are covered you most certainly can. Okay, now back to the list. Below is a simple list that will allow you to glide through the mortgage process with ease on your next home purchase.

What to Do After You Have Applied for a Home Loan

  1. Do – Keep things stable! Try not to make any significant life changes that could impact the buying process. For example moving large sums of money from one account to another.
  2. Do – Keep detailed records. Make sure you have access to all of the important tax and income docs, banking information, and more.
  3. Do – Provide your mortgage lender with everything they request at the beginning. This will decrease the amount of work you have to do later on in the transaction.

What NOT to Do After You Have Applied for a Home Loan

  1. Don’t – Change jobs. A job or career change can literally derail the mortgage process, causing you to kiss those soon-to be-keys goodbye.
  2. Don’t – Apply for any new debt. Any new debts could throw your approval out of whack and be the cause for decline.
  3. Don’t – Be the reason for delay. Remember your Mortgage Team has a job to do and that is to help you get into your home quickly and efficiently. Getting them everything they request ASAP helps us, help you, and in turn gets you into your home sooner.

I  hope you have found this simple list to be of value. If you are looking for a Phoenix Mortgage Lender in AZ I  would be honored to serve you. To set up your personal preliminary mortgage consultation please contact my office at 480-351-5904 today.

With Gratitude,

Jimmy Vercellino

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How to Choose the Right Type of Mortgage Loan

Hey Friends / Hey Family!!

Type of Mortgage LoanBuying a home and obtaining a mortgage is perhaps one of the largest debts you will ever acquire in your life. For this reason, we want to help you professionally manage that debt, and in order to do that we must find out what is important to you about your upcoming home purchase.

In other words, we want to custom fit this mortgage to your individual needs like a well-tailored dress for the ladies or a custom-made suit for the fellas. You feel me? Good! So let us discuss this some more. In order to choose the right type of mortgage loan for you, it’s worth mentioning the 4-5 types of mortgages that you will most likely encounter when speaking to a mortgage lender. Let us have a look below.

1. VA Loan – This loan is available for Active Duty Service Members and Veterans that allows them to purchase a home with zero down and no private mortgage insurance (PMI).

2. FHA Loan – This type of mortgage loan allows a homebuyer to purchase a home with as little as 3.5% down, which can also be a gift. This loan also allows for prospective homebuyers with less than perfect credit to obtain a loan in as little as 2-3 years after a bankruptcy or foreclosure. The FHA loan does, however, have private mortgage insurance on the loan on an up-front and monthly  basis.

3. Conventional Loan – These loans require as little as 3-5% down and require private mortgage insurance. However, the PMI eventually drops off once you have accumulated 20% equity in your home. Keep in mind that this PMI will usually be required for a 5-year minimum before you have it removed from this type of mortgage loan.

4. Jumbo Loans – These loans are categorized as anything above the conforming loan limit of $453,100 (in most counties – some high cost counties allow you to go higher).

5. Down Payment Assistance Loans – These loans are available for homebuyers that are interested in obtaining a grant in the form of a forgivable second mortgage that ends up being forgiven in 3-5 years after you have owned the home. Remember this is a generalization as each program has different guidelines/requirements.

Now that we have reviewed each type of mortgage loan, ask yourself the question, “Which one of these mortgages would appeal the most to me?” From there, it is time to zero in on structuring your mortgage. What I mean by structuring the mortgage is ensuring that the down payment, cash to close, and monthly payment are all within your budget for this upcoming purchase. From there your mortgage provider will be able to tell you exactly how much you qualify for and off you go… Now it’s time to get your certified prequalification form and write Your New Home Story!

If you are in the market to purchase a home and would like more information on different types of mortgage loans, feel free to contact me today at 480-800-8387 or email me to schedule your preliminary mortgage consultation over the phone.

Semper Fi!
Jimmy V.

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First Time Home Buyer? Learn How Jumbo Loans Work

How Jumbo Loans WorkShopping for a home to buy can be exciting and fun. Nothing can diminish the excitement quicker than finding your dream home costs more than you’d hoped. And you discover you may not be able to get the loan from your lender.

Ever consider a Jumbo loan? Jumbo loans are an ideal option today for homebuyers who find luxury homes that fall out of the guidelines that conventional lenders must follow.

Overview

This home loan program is used when the purchase price exceeds the amount set by Freddie Mac and Fannie Mae. As of 2018, the conforming limits for mortgage loans is $453,100. This means that if the price is higher than $453,100 the loan must be classified as a J

umbo loan. Because homes are more expensive in certain areas, the conforming limits are different in these areas.

In some areas, the limit is $679,650. Areas like Alaska, Hawaii, Guam and the U.S. Virgin Islands have higher limits. The highest conforming loan limit is $721,050. In some of the high-cost areas, a home buyer can get a mortgage loan for more than $700,000 and still pay the FHA’s minimum loan down payment of 3.5%.

Jumbo Loans vs. Conforming Loans

When banks use the term “conforming loans”, what they are referring to are traditional mortgage loans given by banks and lending institutions. They’re called conforming because they conform to government guidelines regarding things like loan size, debt-to-income ratio and credit scores. Traditional mortgage loans are often referred to as conforming because they conform to government guidelines regarding things like credit, debts and loan size.

About the only similarity between conforming loans and this program is that they’re both used to purchase homes. Here are the differences between the two.

  • Jumbo loans are from the same bank that originally provides the money to the homeowner. Conforming loans come from a lender but are often later sold on the open market to government-backed lenders like Fannie Mae and Freddie Mac.
  • To be considered Jumbo loans, they must be for a certain dollar amount.
  • They are not government-backed, and usually have higher interest rates than conforming mortgage loans.
  • Conforming loans are offered at many more banks and lending institutions. The lack of availability of Jumbo loans makes them more competitive, often resulting in higher interest rates and stricter guidelines.
  • Conforming loans typically require lower down payments.
  • Conforming loans are often offered with credit scores in the 600s, while Jumbo loan customers should have credit scores of at least 700.
  • Because the dollar amounts are higher, there is more documentation involved and higher closing costs than with conforming loans.
  • Jumbo loan customers may have to have cash or savings equal to several months of mortgage payments.
  • Applicants must adhere to stricter guidelines, such as having two home appraisals.

Advantages of Jumbo Loans

Despite there being some disadvantages to, there are many times when they’re the right choice. There are pros and cons to all loan types. Here are some advantages:

  • They offer tax breaks to borrowers, who can claim interest payments on loans up to $1 million.
  • The interest rates are lower than in recent years.
  • Private mortgage insurance is not required on this mortgage program.
  • Homeowners can buy luxury homes with Jumbo loan that they might not otherwise be able to afford.
  • Customers with higher credit scores can get lower interest rates with Jumbo loans.
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Learn More About the USDA Mortgage Loan

Helpful Facts About USDA Mortgage Loan

Potential homebuyers today have many options available to them in the way of mortgage loan programs.

One loan program that offers many benefits to potential homebuyers is the USDA Mortgage Loan. Here is some information on the USDA mortgage, including what it is, who it’s for and steps to take if interested.

What is a USDA Mortgage?

Officially referred to as the Section 502 Single Family Housing Guaranteed Loan Program, the USDA mortgage loan is a mortgage option offered to individuals or families living in rural and certain suburban areas in the United States.

Although the finance comes from lenders, the loans are guaranteed by the U.S. Department of Agriculture.

The purpose of the USDA’s loan program is to provide families with low-to-moderate income the chance to purchase home in rural areas.

USDA loans do not require the borrower to have a down payment. However, because you’re not putting 20 percent down payment, you’ll need to purchase private mortgage insurance (PMI).

Eligibility for a USDA Mortgage Loan

Although the main eligibility requirement for a USDA mortgage is low-to-moderate income, there are other requirements applicants must meet to be eligible for the loan.

  • Must be a U.S. citizen
  • Must have consistent income for at least two years
  • No late payments on bills for last 12 months
  • Appropriate income-to-debt ratio, as per lender
  • Must occupy dwelling as primary residence
  • Income must not be more than 115 percent of area median income.
  • Must not have been suspended from participating in other federal programs
  • Property must meet program eligibility

Do I Have to Live on a Farm to Get a USDA Mortgage?

Although the home you’re hoping to buy must be in an area that is considered rural, you do not have to live on a farm.

What many don’t realize is that in almost every county throughout the nation, there are parts that are deemed rural. You can live only a mile or so from a large city and still be living in an area that’s zoned rural.

If the property you wish to buy includes a lot of acreage, the property may still be eligible as long as it’s not going to be used primarily for income-producing reasons. Properties used to produce income and vacation homes cannot be purchased with a USDA mortgage.

Benefits of a USDA Mortgage Loan

Here are some of the benefits of a USDA mortgage loan.

  1. No Down Payment – This is probably the biggest benefit for potential home buyers. On a conventional mortgage requiring 20 percent down payment, the home buyer would need to put down $20,000 on a $100,000 home purchase. Even with a 3.5 percent down payment (FHA loans), the borrower would have to come up with $3,500.
  2. Interest Rates Lower Than Market Rates – Because this is a USDA-backed loan, borrowers are charged a lower-than-average interest rate, and the rate won’t fluctuate based on your down payment or credit scores.
  3. Less Rigid Credit Requirements – Borrowers with less-than-perfect credit can still get USDA loans. They also allow borrower to use companies like cell phone or utility companies as proof of credit or payment history.
  4. Lower Private Mortgage Insurance – The premiums for PMI are lower with USDA loans. Once borrowers have paid two percent of the loan amount as the initial PMI, they only have to pay 0.5 percent of the remaining balance over 12 months.
  5. PMI Can Be Financed Upfront – Unlike other loans that require you to pay this amount at the loan closing, USDA loans allow borrowers to add this amount into their loan.
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Seller Concessions When Buying a Home – What Are They?

What Are Seller Concessions When Buying a HomeBuying a home is probably one of the largest transactions you’ll make in your lifetime.

Seller concessions is one way that buyers can save some money. In some cases, this can be a substantial savings.

In most cases, you’ll not only be paying for the home but will also be paying interest and many additional closing costs. Because of this, you’re going to want to save as much money as possible in the transaction.

Here is some helpful information on about it and how you may benefit from them.

What Are Seller Concessions?

Seller concessions are also referred to as seller contributions because that’s exactly what they are. They’re contributions the seller agrees to pay during the closing of the mortgage loan.

Home buyers often forget, or may not even be aware of, the many closing fees involved in the home buying process. As the loan closing approaches, they’re reminded that there are many additional fees many of which must be paid at the closing.

In some cases, these fees may be added into the loan. However, if they can’t be added in, it can result in the buyer being forced to cancel the sale if he or she can’t afford to pay the fees. Seller concessions can help the buyer complete the transaction because the seller will pay some or all of the extra fees.

What Type of Fees Are Included in Seller Concessions?

Sometimes, buyers have their finances stretched to the limit after they’ve put down a down payment. As stated above, loan closing costs can add up to thousands of dollars.

It’s seldom the same in every transaction. Some of it may depend on state laws regarding real estate purchases, and some of it may depend on the value of the home.

Closing costs may include any or all of the following:

  • Title insurance costs
  • Transfer fees
  • Inspection fees
  • Attorney fees
  • Loan processing fees
  • Appraisal fees
  • Fees for credit reports

Is There a Limit on Seller Concessions?

State laws, as well as geographic location, may also dictate the amount or type of fees that may be included in a seller concession.

There are limits as to how much a seller can pay in concessions. The limits are usually between 2 and 9% of the home’s appraised value.

Although the amount can be negotiated between the mortgage broker and real estate agent, these factors can also play a role in determining the amount of the concessions:

  • Type of mortgage
  • How the home or property will be occupied
  • Amount buyer borrows

Advantages of Seller Concessions

The main advantage to seller concessions is that the buyer is going to save money and may be able to purchase a home that he or she might not otherwise be able to afford.

While it appears that this may benefit just the buyer, they can also benefit the seller.

If the seller is eager to sell the real estate, paying for all or some of the closing costs can speed the process along. If the seller is planning to buy a different home, the seller is probably going to be eager to sell.

Paying the concessions can make the original sale go quicker, which will make it possible to purchase the second property quicker.

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Home Loan Mortgage Documentation Requirements

Mortgage Documentation Requirements for Home LoanWhen you’re in the process of seeking a loan, there are several pieces of mortgage documentation that will be required.

The complete list of requirements is slightly different from one person to the next.

Nevertheless, there are some universal pieces of documentation that are required for all mortgage applicants.

With that in mind, let’s look first at those consistently required and then the specific requirements related to VA loans.

Universally Required Mortgage Documentation

Filling out a standard mortgage application will alert to the types of documentation expected.

  • The applicant will need to sign an agreement that will allow the lender access to several pieces of the applicant’s personal information.
  • The applicant’s social security number and credit report are the most significant personal data collected once the applicant grants permission.
  • Generally, a month’s worth of pay stubs and two years’ worth of W-2s are also expected.

The lender requires the information related to this disclosure agreement to assess the applicant’s financial and employment history so as to make an informed decision regarding the loan request.

Once all the disclosures have been signed, if a lender approves a mortgage application, more personal information will be gathered from the new client in order to help find the best possible fit among the different options available.

At this time, identification including a driver’s license will be required. Further financial documentation will be necessary in this stage of the mortgage planning process.

These include bank statements, and employment verification.

Documents Relating to the Home

Furthermore, documentation will be required related to the home for which the client seeks the mortgage loan. This paperwork includes

  • the purchase contract
  • a copy of the earnest money deposit check that was written for the real estate transaction
  • preliminary title report
  • proof of any insurance covering the house
  • an asset assessment

Further Mortgage Documentation May be Required

Depending on the type of mortgage sought and other individual variables, further documentation may also be required.

  • Additional bank statements and pay stubs may be requested.
  • If self-employed or otherwise employed without a W-2, a business license or CPA letter may take the place of the W-2 requirement.
  • Some situations require documentations of a property appraisal.

Documentation Expected for a VA Mortgage Loan

If seeking a mortgage while in military duty, a Statement of Service and Certificate of Eligibility (COE) will be required.

For those not currently serving, a COE is still required; proof of prior military service will be required in the process of making the request for this documentation.

Additionally, the DD-214 is required for those not presently serving in the military.

How to Get Your VA Documents

The Statement of Service can be obtained by contacting the applicable commander, personnel office, or adjutant.

The lender may have access to the Automated Certificate of Eligibility (ACE) system, through which eligibility can be determined via an online application for the COE. Most lenders have access to this ACE system, although ACE can only process eligibility for people that the VA has enough personal information about.

If ACE does not work, then the COE can be obtained through submitting VA form 26-1880 with the request for this certificate to the Winston-Salem Eligibility Center.

Every person seeking a mortgage will need to go through a process that requires much mortgage documentation.

The specifics differ from one person to the next. Yet, enough consistency exists among mortgages in general, and especially among specific VA loans that this should help as a guide to know what is needed when applying and meeting with a lender.

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Renovation Loans for Home Improvement – How They Work

Renovation LoanIf you want to make the move to a new home, you will first have to sell your existing property. You will naturally want to get as high an amount as possible from the sale of your home.

One of the best ways to add a significant amount to the resale value of your home is to take out a renovation loan.

How a Renovation Loan Differs from Other Types of Loans

There are several ways that this loan differs from other types of loans. The chief difference is that most mortgage loans will offer you a financing arrangement that will enable you to borrow a fixed amount of money that is based on the price you paid for the property. Some loan arrangements will go a bit further by allowing you to borrow money based on the actual current market value of your property.

A renovation loan is superior to these other forms of loans in that it will allow you to borrow money based on the projected value of your home after you have completed the proposed improvements. This naturally gives you a higher figure to borrow money based on.

How Does This Type of Loan Usually Work?

In most cases, a renovation loan works similarly to other types of loan arrangement. The process normally begins with a single loan, followed by a single closing at the time the loan is paid off in full. The lender will advance funds to the contractor that you hire for the work. The money will be delivered in installments as each stage of the work is completed.

Purchase Renovation Loan

Home Improvement Loan

There are two very common varieties of this loan. The first is known is a purchase renovation loan. This type of loan is perfect for people who wish to begin the work after closing on the purchase of the property in question.

The loan can be provided for both the purchase of the property and the work that will immediately begin on it. A minimum down payment will usually be about 3 to 5 percent of the projected value of the home once the improvements have been made.

Refinance Renovation Loan

The second major type of this loan is known as a refinance renovation loan. It can also be referred to in some cases as a rehab loan. This type of loan is very similar to the first one, with some slight differences.

This loan is the perfect type of loan arrangement for people who already own the property that they desire to renovate in order to increase the value of. Under the terms of this loan arrangement, any prior financing that exists on the property an be paid off while additional funds for the work are provided. Depending on what type of renovations you qualify for, you can borrow up to 100 percent of the value of your home once the work has been completed.

How Do You Apply for a Renovation Loan?

We can help you with that! There are many different agencies that you may apply to in order to receive a this type of loan. Fannie Mae and the FHA both offer excellent refinance renovation loan programs. Contact us for more details.

 

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2018 Increase in Mortgage Loan Limits in Arizona

Have you heard about the three major changes  in mortgage loan limits affecting our housing market?

Mortgage loan limits in AZ have gone up for 2018 across the board on Conventional, FHA, and VA. Here’s the great news…

  1. FHA Loan limits have recently increased from roughly $279,000 all the way up to $294,515, expanding the housing market and the opportunity for you to find the perfect home.
  2. Conventional Loan limits have gone all the way up to $453,100. Why is that a big deal? Previously, if you were above $424,000, you would have been forced into the jumbo financing arena. Now this is not the case – once again allowing you to finance more and perhaps find that perfect home for you.
  3. VA Loan limits have also followed suit with regards to conventional financing, allowing a veteran to finance as much as $453,100 with no money down and no private mortgage insurance required. This makes VA Loans some of the most, if not the most, competitive financing terms available for Veterans in the housing market.
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How the Right Phoenix Loan Officer Can Help You

Phoenix Loan Officer Top 1% 2017 AwardPurchasing a home is a huge transaction and not one you want to enter into lightly. It can also be an exciting adventure, particularly if it’s your first home purchase.

The excitement can quickly fall to the wayside, however, if you’re unfamiliar with the process and find yourself in over your head. When you apply for a mortgage, you may find that there is a lot more to it than you’d anticipated. Using the right Phoenix loan officer can make all the difference.

Learn what we can do for you and why it may be beneficial to talk to us when you’re ready to apply for a mortgage.

What is a Loan Officer?

We are professionals trained in the areas of finance, business and loans. We can not only help get you through the process, but also help you choose the loan that’s best for you and/or your family.

What many people don’t realize is that there are different types of mortgage loans to choose from, and your local Phoenix loan officer is going to have the inside scoop on which type is best for you and your family.

FHA Loans – FHA loans are loans that are backed by the Federal Housing Administration.

They do require that you purchase mortgage insurance, but also offer benefits. They typically offer lower interest rates and are available to borrowers with less-than-perfect credit scores.

FHA loans also require only a 3.5 percent down payment. They are an excellent option if you’re a first-time home buyer.

VA Loans – VA loans are mortgage loans available to veterans and their spouses.

They are backed by the Department of Veterans Affairs, so they are also attractive to potential homebuyers or homeowners interested in refinancing their current mortgage loans.

They’re also available to consumers with less-than-perfect credit. The best features of VA loans are that they do not require mortgage insurance and typically don’t require a down payment.

Conventional Loans – Conventional loans are mortgage loans you get through lending institutions like banks, savings and loan, credit unions and private lenders.

They may or may not require mortgage insurance depending if you have at least 20 percent down payment.

Credit scores, home values, down payments and debt-to-income ratios usually determine interest rates.

While conventional loans may appear to be the most unattractive of the three types, there are times they’re the best option. Here again is where a home loan specialist can be of great service.

What a Phoenix Loan Officer Does for You

Since you’ll probably be making payments on your mortgage for anywhere from 10-30 years, you want to make sure you’re getting the best and most affordable loan that is offered in the Phoenix area.

As your loan officer and team, we assist you with the following.

  • Completing and submitting your documentation
  • Going over the lending process with you
  • Explaining loan terminology
  • Explaining the different types of mortgage loans
  • Helping you choose the right loan type
  • Assisting you throughout the entire process from the beginning and through the closing

Having the right loan officer working with you can make the difference between a complicated or easy transaction.

It can also leave you with the confidence that you got the best deal and are armed with the information you need regarding your mortgage loan.

Let Jimmy V, Phoenix loan officer, and his Highly Motivated Truly Dedicated Vercellino Team help you get the home of your dreams, with right type of mortgage loan with the best interest rate!

 

 

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