After the problems we have seen over the past few of years in the real estate, mortgage and banking industries, it is not surprising we have seen significant changes brought about which makes it more challenging for a home-buyer to obtain a mortgage. Some of the changes borrowers see when they attempt to obtain a mortgage to buy a home or refinance their existing mortgage include:
- Documentation –Did you like that “no-doc” loan you did last time around? Forget about it! This time around you may be asked to provide, in addition to items that have been standard for years such as paycheck stubs and bank statements, additional documents to prove residency, income, financial soundness or even identity. A couple of examples would include sourcing “large” deposits and identifying any and all credit inquires for the 120 days.
- “Fresh” Documentation –If it takes longer than 30 days to close your loan then your Lender will likely ask you to provide updated bank statements on a monthly basis, as well as update other documentation as necessary so that all documentation is up to date and current. Just before closing, the lender will update and review your credit to make sure no new accounts were opened or significant changes were made since application; the lender will also contact your employer to make sure your employment situation and compensation have not changed since the verification was complete.
- Slow Down –Don’t wait until the last minute to apply for financing as the new legislation is slowing the process. For example, it is now mandatory that no less than eight days must lapse between the time of your loan application and the closing of the loan. Normally, this is not a problem as most loans take considerably longer, but it could be an issue if you are in a time crunch and waited too long to start the process. In addition, even minor changes to the terms of your home purchase and/or loan could delay closings by at least three days due to requirements of the lender to update disclosures and give you a mandatory period of time to review them prior to closing.
- Tax Returns Don’t Lie –In the past lenders typically did not request a copy of your tax return unless you were self employed or had “other” income outside of employment that was necessary to count to qualify for the loan. Lenders are required not only to obtain a copy of your tax returns for the past two years (in some cases 3 years) directly from the IRS.
- Appraisal Issues –New regulations prevent your loan officer from speaking with appraisers directly in order to assure that there is no influence put on the appraiser with respect to his or her opinion of value of the home. This has caused many lenders to turn to using national appraisal management companies which sometimes hire non-local appraisers which may affect the accuracy of the appraisal.
- The silver lining –Sure, there are new regulations and it is more challenging, but interest rates are at near historic lows, so the extra effort you have to put forth will be handsomely rewarded for years to come!
If you are looking to buy a home or take advantage of the great rates and refinance you existing mortgage, you should not let the new rules scare you off. Instead I would just suggest you be careful and prudent about selecting your lender, selecting one that has the experience, knowledge and resources to get you through the process as painlessly as possible….
St. Louis MORTGAGE INTEREST RATES for November 30, 2011:
- Conventional 30-Year Fixed 4.125%/ 4.320% APR
- Conventional 15-Year Fixed 3.375%/ 3.565% APR
- Conventional 5/1 ARM 2.750%/ 3.159% APR
- FHA/VA 30 Year Fixed 3.875%/ 4.090% APR
- Jumbo 5/1 ARM 2.875%/ 3.016% APR
- Jumbo 15 yr Fixed 3.500%/ 3.760% APR
- Jumbo 30 yr Fixed 4.750%/ 5.020% APR
*The above mortgage rates are based upon an 80% LTV, o/o single family with FICO scores of 720.
Paramount Mortgage is a locally owned Mortgage Banker celebrating our 41st year. Great rates and programs are secondary to what is most desired in a lender relationship: Integrity, Communication and Customer Satisfaction. Be to check out our website: www.paramountmortgage.com
For more information or if you have questions on mortgage rates you may contact me by phone at my direct line, (314) 372-4319, email at rfishel@paramountmortgage.com or you can visit our company website at http://www.paramountmortgage.com.
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