Friday, January 20, 2017

Buying a Home in 2017 – Be Prepared, Not Scared

Posted by: Mike Dulla, President, United Home Loans

In 2017, prospective home buyers should not be frightened by the mortgage application and approval process, but they do need to be prepared.  

Recently, underwriting guidelines eased and new programs with looser requirements were introduced to the market. One example is the Fannie Mae HomeReady program, which only requires 3% down and allows the funds to come from flexible sources such as a gift or grant. Another example is lower down payment requirements for jumbo loans. Some jumbo lenders allow down payments as low as 5% for loan amounts up to $650,000. And yet another is the reduction of the minimum credit score required for FHA loans. Even though FHA guides state that a borrower is eligible for financing of up to 96.5% of the purchase price with a credit score of 580, many lenders required a 640 minimum score. That minimum is now lowered to 620, 600 and all the way down to 580 for some lenders.  

Although guidelines have loosened a bit, the actual underwriting process is still complicated and very thorough. Home buyers and home loan applicants need to understand and be prepared for evaluation when they apply for a loan. Having all of your ducks in a row will make for a more efficient approval process and a much happier home buyer. Also, it is important to work with a lender that embraces technology to assist with the overall process. United Home Loans contracts with mortgage industry tech provider BeSmartee to create a seamless digital application experience that allows the borrower to enter personal information securely, obtain their credit report, run automated underwriting findings, and pay for the appraisal. It evens gives borrowers the option to automatically import their bank statements and LinkedIn information to save them time, effort, and aggravation.

Even with this technology, there is no substitute for working with a knowledgeable loan officer and mortgage lender. There's a lot involved in a typical real estate contract, so you need a mortgage advocate on your side. What dates do you need to pay attention to in the contract that could trigger a default? When should you order your appraisal so you do not compromise negotiations? Is it better to put down as much as possible or use some down payment funds for other purposes? If required, what type of mortgage insurance is best?  And, most importantly, who is going to help fix problems when they come up?  As you can guess, real estate purchases usually have some bumps in the road.  

So, if you are thinking about buying a home, applying for a mortgage, and all that comes with it, remember the Boy Scout motto and be prepared. Also remember that United Home Loans is always here to help. For no obligation advice, contact us here or at 708-531-8388.      


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