The BIG DON'T DO'S AFTER you Apply for a Mortgage

The BIG DON'T  DO'S AFTER you Apply for a Mortgage

1. Don’t deposit cash into your bank accounts. Lenders need to source your money and cash is not really traceable. Small, explainable deposits are fine, but getting $10,000 from your parents as a gift in cash is not. Discuss the proper way to track your assets with your loan officer.
2. Don’t make any large purchases like a new car or a bunch of new furniture. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher ratios…higher ratios make for riskier loans…and sometimes qualified borrowers are no longer qualifying.
3. Don’t co-sign other loans for anyone. When you co-sign, you are obligated. With that obligation comes higher ratios, as well. Even if you swear you won’t be making the payments, the lender will be counting the payment against you.
4. Don’t change bank accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is a consistency of accounts. Frankly, before you even transfer money between accounts, talk to your loan officer.
5. Don’t apply for new credit. It doesn’t matter whether it’s a new credit card or a new car, when you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.
6. Don’t close any credit accounts. Many clients have erroneously believed that having less available credit makes them less risky and more approvable. Wrong. A major component of your score is your length and depth credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both those determinants of your score.

The best advice is to fully disclose and discuss your plans with your mortgage broker before you do anything financial in nature. Any blip in income, assets, or credit should be reviewed and executed in a way to keep your application in the most positive light.






Contact Kessler Real Estate Financial Services if you have any questions!

The BIG DON'T DO'S AFTER you Apply for a Mortgage

Conforming vs. Jumbo Mortgage Loans - FLORIDA HOME LOANS

Determining whether or not your loan is jumbo or conforming may seem confusing; which is why, we have crated this blog post as an educational resource.

It simply boils down to: the type of loan (FHA or Conventional), your county's limit and the type of property you are purchasing or currently own. For example, a non-FHA loan limit for a single family home, or condo, in Collier County, FL is $448,500 and in Monroe County, FL is $529,000 yet, all other counties in Florida the limit is $417,000. The reason for this difference is some, more affluent, counties have higher limits as a consequence of average home prices and land value being more costly.

Conforming or Jumbo. Which one are you?
You’ll need to first determine the type of financing (FHA or Fannie Mae/Freddie Mac. FHA and Fannie Mae/Freddie Mac have set different loan limits so you’ll need to use the proper resources when checking local loan limits.

FHA loan limits. Simply enter your state, county and hit send at the bottom of the screen. You’ll be given the loan limits for your county along with the loan limits for each property type within your county.

Fannie Mae/Freddie Mac loan limits. While this is Fannie Mae’s site, both Fannie Mae and Freddie Mac rarely move independently of one another.  The charts will offer the loan limits for each property type; however, does not provide detailed information regarding high-cost counties.

Conforming and Jumbo Loan Underwriting Differences
Conforming lending rules are more flexible than jumbo – from the required credit score to the down payment. With regard to jumbo lending, guidelines are more stringent, and with good reason, lenders are taking more risk. Additionally, you’ll find jumbo loans will require higher credit scores and larger down payments.

Conforming
Conforming Programs and Rates. Conforming loans offer more competitive rates and offers both ARMs and Fixed rate programs.

Conforming Credit. You will need to have a minimum credit score of 620.
Conforming Income. All types of income can be used when qualifying for a conforming loan. Speak with your mortgage professional should you have questions about your earned income.Conforming Assets. The lender will want to see two to three months savings (reserves). One month’s reserve is the equivalent to one full month’s mortgage payment (principle, interest, taxes and insurance).

Conforming Debt. The lenders use debt-to-income ratios to qualify you. Conforming guidelines (rules) are more flexible and you can be approved above the suggested debt-to-income ratio.  Just keep in mind, your gross income is used when determining whether or not you qualify so be sure you are comfortable with your monthly payment.
Conforming Property Appraisal. Only one appraisal is required.

Jumbo
Jumbo Programs and Rates. The rates for jumbo loans are less competitive than conforming loans. Additionally, adjustable rate mortgages are most commonly used in the jumbo arena. While fixed rates are offered, the rates are about half-percent higher than that of a conforming loan.

Jumbo Credit. The minimum credit score for a jumbo loan is 700.

Jumbo Income. Just as with conforming loans, All types of income can be used when qualifying for a conforming loan. Speak with your mortgage professional should you have questions about your earned income.
Jumbo Assets. In addition to the down payment and closing costs, a jumbo lender will want to see a minimum of twelve months reserves (remember, one month reserve = one mortgage payment).

Jumbo Debt. As with conforming loans, jumbo lenders use debt-to-income ratios for qualification purposes. Jumbo guidelines (rules) are not as flexible. For example, a conforming lender may approve your loan at forty-five percent; however, some jumbo lenders will limit you to forty percent.

Jumbo Property Appraisal. Depending on your loan amount, you may be required to pay for two appraisals.

When researching your financing options be sure and talk with your mortgage professional regarding all of your available options.

www.KesslerHomeLoans.com

Conforming vs. Jumbo Mortgage Loans - FLORIDA HOME LOANS

Big FHA changes this year in 2013!

Uncle Sam needs more money, so he’s hitting up FHA loans again. Here’s a break-down of the changes:

Big FHA changes this year in 2013!

Getting Qualified for a Home Loan and being Self-Employed

It wasn’t too long ago that home loan officers could offer a so-called, “SISA” loan – which stood for, “Stated income, Stated assets.”  All a loan officer had to do was pull credit and make sure the borrower’s FICO score was decent, and they were off to the races!  As you can well imagine, those days are long gone.  Not only is SISA gone, but “No Doc” loans are gone too.  That is generally good news for responsible banking practices, but it can hurt self-employed borrowers with lots of legitimate write-offs.


Despite a radically different lending environment, it is still very possible for self-employed borrowers to qualify for a home loan.  Tax returns are still the gold-standard and necessary for underwriting, but that is something a highly qualified loan consultant can help you with.  If you’re a self-employed person applying for a loan, here are some things to keep in mind:

• If you are newly self-employed, you must have a two year history of self-employment before you can use that income to qualify.
• You will need to provide your last two years of Federal tax returns – business and personal.  Make sure you have K1′s available if you receive them.
• The chances are strong that you will also need to provide a YTD profit and loss statement along with bank statements to show that your business is stable.
• If your income has been declining, the underwriter will probably take a worst-case scenario calculation rather than an average of the past two years.
• Depreciation and depletion can usually be added back (because it is a non-cash expense), so if you are involved in a business with a lot of depreciating assets, this will help your qualifying numbers.
• If you have filed a tax extension we will need to see proof of the extension.
• If you have liabilities (such as a car payment) that are being paid by the business, if you have 12 months of cancelled checks to prove the business is paying, that liability can be removed so that you are not “double-dinged” for it.

There are many nuances to working through tax returns to help qualify self-employed borrowers, but it is totally doable for well-trained loan consultants.  If you have any questions, never hesitate to call us to talk it through or even get an analysis of your scenario.

Getting Qualified for a Home Loan and being Self-Employed