How to
Successfully Get a Mortgage in 2011Getting a mortgage in 2011 is a little more complicated than it has been in the past
due to the challenging economy and increased government regulation of the
mortgage industry. In fact, it's like a giant hurricane has swept through the housing
and mortgage markets, leaving chunks of debris and danger in its wake. But never
fear; that's why I am here! As your Certified Mortgage Planning Specialist, my role
is to walk by your side, be your personal guide, and set you up for success every
step of the way. Here are a few of the challenges that we will tackle together as we
navigate the danger zone known as the 2011 mortgage process!
New Good Faith Estimate
The US government has created a new version of the disclosure form known as
the Good Faith Estimate (GFE). The old GFE itemized all your closing costs and
illustrated your "cash-to-close" - the amount of cash you would need to bring
to the closing if you are buying a home, or the net proceeds you would receive
at the closing from a cash-out refinance. The new GFE lumps in your closing
costs under certain categories instead of itemizing them, and does not illustrate
your cash-to-close. Also, if the seller is paying closing costs or points on your
behalf, this is not reflected on the new GFE. In other words, it will look as
though you are paying these fees even though the seller is paying them. As
your Certified Mortgage Planning Specialist, I go above and beyond the
government's minimum requirements for my clients. In fact, I have created
special systems and easy-to-understand forms to help illustrate the total costs
associated with the loan options available to you.
Please contact me for more details.
New Appraisal Guidelines
Most mortgage loans these days are either insured by the Federal Housing
Administration (FHA) or sold to Fannie Mae or Freddie Mac. This means that
mortgage banks and brokers need to follow the rules set by Fannie, Freddie,
and the FHA. In 2009, Fannie and Freddie adopted new rules surrounding
the home appraisal process. In 2011, the FHA followed suit and implemented
many of the same guidelines. What this means for you is that the appraisal
process is going to be more stringent and inflexible, costly, and time
consuming than it has been in the past.
In fact, many appraisals now go through multiple layers of screening and
are handled by Appraisal Management Companies, resulting in higher costs
and fees. Also, loan originators are prohibited in most cases from ordering
appraisals or communicating directly with appraisers. Even so, it is important
to keep in mind that an appraisal is simply somebody's opinion of what your
home would sell for in today's market. Appraisers are required to consider
the selling prices of short sales and foreclosures in the local market when
determining the current market value of your home. This may result in a value
estimate that may not agree with your own opinion of what your home may
be worth. You and I are entitled to disagree with the appraiser and have a
different opinion, but the lending guidelines that we need to follow require us
to use the appraiser's opinion when calculating your loan amount and strategy.
As your Certified Mortgage Planning Specialist, my commitment to you is that
I will help you understand the appraisal report once it is completed. If there are
any errors, I will do what I can to get them corrected. Most importantly, I will
work hand in hand with you to adjust the mortgage strategy as necessary if
the appraiser's opinion of value comes in below what you or I think your home
may be worth.
New Disclosure Rules
The US Congress has enacted some new laws, and the Federal Reserve Board
has issued some new guidelines that could delay the loan process. For
example, if the APR on your loan changes by more than 0.125% before the
closing, the lender needs to issue new disclosure forms and give you time
to review the new forms.
Here are just a few examples of what could cause the APR to change:
- You decide to lock in your interest rate or get a rate lock extension
- You decide to reduce your loan amount
- You are getting an adjustable rate mortgage and the index value changes
- Your credit score changes before closing, resulting in a higher rate or higher fees
- You decide to pay more or less points than what you initially requested
As your Certified Mortgage Planning Specialist, my commitment to you is that I
will help you avoid costly delays to the best of my ability by planning with you
ahead of time and setting you up for success. While I can't control everything
that happens during the loan process, I do have the experience to know what
pitfalls to look out for and help you plan accordingly.
Higher Credit Score Guidelines
As stated above, most mortgage loans these days are either insured by the
Federal Housing Administration (FHA) or sold to Fannie Mae or Freddie Mac.
This means that mortgage banks and brokers need to follow the rules set by
Fannie, Freddie, and the FHA - all of whom have issued stricter credit scoring
guidelines. I know it sounds ridiculous, but if your credit score is less than
740 (gasp!) you may get hit with higher fees if your loan is being sold to
Fannie or Freddie! Most of my clients are responsible individuals who take
pride in paying their bills on time and maintaining a good credit rating.
However, many Americans have recently been hit with unexpected financial
difficulties due to the challenging economy.
In fact, many credit card companies have reduced the credit limits on accounts
that have never even been late. This is causing credit scores to go down
across the board for people who have never been late on any payments in
their life! If you fall into this category, or if you have some challenges with your
credit score, you may get hit with higher costs when it comes to getting a mortgage.
As your Certified Mortgage Planning Specialist, I will work with you to evaluate
your options and point out strategies and ideas for increasing your credit score
and getting a great deal on your mortgage. Please contact me for more information
on any of these items and how they may impact your situation. As always, I am
here for you every step of the way. Together, we will make getting a mortgage in
2011 a very rewarding experience for you and your family!
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