Tips for simple loan approval
Here is a list of useful tips to facilitate an effortless loan process. These DO’s and DON’Ts will help you avoid any delays and costly challenges with your loan approval.
If you encounter a special situation like identify theft, it is best to mention it to us right away so we can help you determine the best way to achieve your goals.
DO call us if you have any questions.
DO provide requested documentation promptly and in its entirety.
DO continue living at your current residence.
DO continue making your mortgage or rent payments.
DO continue to use your credit as normal.
DO keep working at your current employer.
DO keep your same insurance company.
DO stay current on all existing accounts.
DO expect requests for additional documentation throughout the loan process.
DO let us know if you will be receiving gift money before it is deposited into your account.
DON’T change your employment status.
DON’T make any major purchases (car, furniture, jewelry, etc.).
DON’T change bank accounts.
DON’T make any large cash deposits into your bank accounts.
DON’T transfer any balances from one account to another.
DON’T close any credit card accounts.
DON’T consolidate your debt onto one or two credit cards.
DON’T apply for new credit or open a new credit card.
DON’T max out or overcharge on your credit card accounts.
DON’T take out a new loan or co-sign on a loan.
DON’T pay off any loans or credit cards, charge offs, or collections without discussing it with us first.
DON’T finance any elective medical procedure.
DON’T join a new fitness club.
DON’T open a new cellular phone account.
DON’T have your credit pulled or dispute any information on your credit report.
DON’T pack away or store any important documents, even if they aren’t initially requested.
Let us show you how simple securing a home loan can be.
10 Common Home Buyer Mistakes
No, you don't need a 20% down payment to buy a house
Lack of inventory has made for a highly competitive housing market this year, which in turn has pushed home prices up.
According to the U.S. Census Bureau, the average home price in February 2017 was $390,400. This compares to $355,300 in January 2017 and $349,400 in February 2016. Rising home prices makes it difficult for homebuyers to make a sizeable down payment and encourages bidding wars that increase the price tag even more.
It's generally said that a 20% down payment is typical or at least wanted by most sellers and real estate agents. According to a recent Redfin survey, 35.7% of real estate agent respondents said a 20% down payment is generally associated with a successful bid on a home.
With the average price at $390,400, a 20% down payment would be $78,080 - more than many homebuyers have saved up. As such, many are forced to make smaller down payments.
However, Redfin's study found that this might not be as big a detriment as one might think. Nearly one-fourth of respondents said down payments of between 3% and 5% seem to have a good chance at success. In fact, there are many ways to seal the deal on a home without putting up your entire life savings.
Make a connection
Many successful bids come from people who have established a connection with the seller. This doesn't mean they're best friends or even that they know each other. One Chicago area agent, Rano Khudayberdieva, told Redfin that writing a cover letter can greatly improve a prospective buyer's chances of getting a bid accepted.
"Writing a cover letter can improve a buyer's chances of getting a bid accepted."
"You'd rather have a committed buyer who put a little less down than a buyer with 20% down who may back out," Khudayberdieva explained.
Another Chicago area agent, Tim Zielonka, said a buyer who bonded with a seller over a common interest was able to beat out his competitors who made larger down-payment offers.
"I recently had an FHA-backed offer with 3.5% down beat out four other offers, each of which had conventional 20% down loans," Zielonka said. "The sellers were at the showing. I introduced them to the buyers and pointed out that both were huge enthusiasts of both vintage bicycles and classic cars, which put them at ease with one another and enabled them to form a natural connection. Had they not discovered this shared interest, my clients may not have gotten the property."
Explore other loan options
A conventional mortgage requires the buyer either make a 20% down payment or purchase private mortgage insurance, which could potentially add thousands to a home loan. There are, however, other loan products that allow for a smaller down payment without a PMI obligation - as long as you qualify.
If you or your spouse has served in the armed forces, you may qualify for a VA loan. These loans offer very low rates, plus don't require a down payment at all, as long as the sales price of the home is less than the appraised value, according to the U.S. Department of Veteran Affairs.
The Federal Housing Authority has a loan program to encourage first-time homebuyers find a house they can afford while also reducing risks for lenders. Under the FHA program, a buyer can put as little as 3.5% down - as long as their credit score is 580 or higher. But if you've got a not-so-impressive score, don't worry. You can still put as low as 10% down on a home under the FHA program.
In an effort to aid low- and moderate-income families living outside major metropolises obtain adequate housing, the U.S. Department of Agriculture offers a loan program in rural areas. Though it's often called a "rural home loan," it's actually available in the majority of the U.S., though not in very large cities. Like the VA loan, a down payment isn't required for USDA loans.
Seek out down payment assistance
Down payment assistance programs are available to many homebuyers, regardless of whether they've purchased a home before or not. According to research conducted by Urban Institute, these programs have aided in the purchase of many homes across the U.S., largely without risk to the lender or increased fees to the borrower. Every program is different, but many offer to pay a portion of your down payment or closing costs for you.
Though paying PMI can add to the cost of the mortgage, there are situations where purchasing this insurance product is actually your most cost-effective option. For example, if you have an excellent credit score, your lender may give you a generously low PMI rate. Additionally, you'll be able to cancel your PMI once you've paid off 22% of the home price or more. If you know you can reach this goal fairly quickly, it might be worth paying the PMI for a few months and cancelling it as soon as you can.
Coming up with the funds for a down payment is often one of the most difficult hurdles of making a home purchase. Luckily, consumers have myriad options for clearing this obstacle and carrying on with their homebuying journey.