Finance Archive

All About Mortgage Pre-Approvals

Real Estate Mortgage Approved Loan Document With House KeyGetting a mortgage pre-approval is a complex process but a necessary one in the acquisition of a house. Mortgage pre-approval involves having the lender determine the loan program you can qualify for and the interest rate thereof. The lender bases the assessment on factors such as income, credit score, debt, as well as employment history.

Why is it important to get pre-approved?

Altius Mortgage Group, a mortgages expert from Utah, reiterates that even before you begin looking at mortgage offers, you must first get pre-approved. Going house hunting before doing so is like walking into a supermarket without a wallet — even if you spot something you like, you won’t be in apposition to engage in a transaction.

Getting pre-approved gives you an accurate idea of what you can afford, saving you the time you’d spend looking at houses beyond your price range. Further, a pre-approval letter is proof that you’re a credible buyer, and sellers will take you more seriously than someone without this letter.

What documents do you need to get pre-approved?

The documents required vary from lender to lender. But, generally, you will need documents that show your income, assets and any other commitments against your income. These are some of the documents you’ll need:

  • Thirty days of pay stubs
  • Bank statements of two months from all your accounts
  • Two years of W2s
  • Last two federal tax returns

Does getting pre-approved guarantee a loan?

It’s important to note that pre-approval letters are subject to modification and even cancellations. Should your financial conditions change, the lender has every right to cancel the pre-approval letter.

A pre-approval letter is not a commitment to make a loan, an offer to lend, or a guarantee of specific terms or rates. Before extending your loan, the lender may require additional asset and income verification, plus the satisfaction of other conditions.

For fear of not getting approved, some buyers put off the loan application process. The problem with doing this is that you postpone your dream to own a house. If you’re worried about your credit score, getting an assessment will help you begin improving the score for future eligibility for mortgages.

Borrowing Money: The DOs and DON’Ts

Paper bills on a tableNo one wants to have debt, but sometimes you just got to do what you got to do if you need some extra cash. This is why it’s very crucial that you do research your options thoroughly before you commit to getting new debt. If you’re a still uncertain if you should borrow money or not, consider the following DOs and DON’Ts of borrowing money.

DO Extensive Research First

Never go to the first lender or credit source available to you. It’s important that you shop around for a specific loan that would meet your needs and offer you monthly payments that you could comfortably afford. If you have an issue with your credit score and can’t find a good deal because of it, you might want to build it up first and then try looking for cash loans again, suggests a loan officer from the Utah Money Center in Provo.

DON’T Focus on the Interest Rate

Aside from the interest rate, check out prepayment or late payment penalties as well. Be wary of loans that require add-ons such as credit life insurance since these policies would increase your interest rate if you roll them into your cash loan.

DO Know How to Budget

If you have debt, you have got to know how to effectively manage your money. Start with monitoring your monthly income and expenses and then evaluate them at the end of the month. Determine if your expenses are reasonable and see if you could cut back on some of them. This is the only way to see where your money is going and ensure that you have enough money for your monthly loan payments should you decide to get one.

DON’T Pay Late

Paying bills that you could afford to pay would only increase your interest and negatively impact your credit rating. Not to mention the potential penalties for late payments that could easily throw off your budgeting efforts.

Everybody will borrow some money at some point in their life, but the important thing to remember is that you need to do your due diligence before you sign anything. Also, it’s vital that you only take on debt that you could afford.

 

Getting a VA Loan: What Do I Need to Do?

A loan has been approvedHaving a car is great, but owning your own home is a sound investment. So you’ve got your eyes on one of these, but the only way you can afford one is to get a loan. If you’re a veteran, a VA Loan in Missouri can help you get the car or house you’ve always wanted to have.

Who Can Apply?

If you’re a member of the US military, a retired veteran, a military reserve or a National Guard member, you are eligible to apply. If you are a spouse of any of those mentioned who died doing their duty, you are also eligible to apply for a VA Loan.

What Do You Need to Prepare?

There are several things you can do to prepare for a VA Loan application. First, check your credit report. Make sure that your credit record is clean and that you have a credible status as a borrower. This affects how much you could borrow for your VA loan.
You should also prepare your Certificate of Eligibility (COE). Contact the Department of Veteran’s Affairs for your Certificate. You could also ask lenders such as Top Flite Financial, Inc. to assist you in getting your COE.
There are other documents you need to prepare, such as your recent tax returns, paycheck slips or stubs, and other employment documents.

What Are the Advantages of a VA Loan?

A VA Loan usually does not require a down payment. If you pay down payment, you only need to pay only 3.5 % of the total loan.
A VA Loan also offers lower than the average interest rates, so it is easier for many borrowers.
For those who want to own a car or a house but need to take out a loan, you should consider getting a VA Loan if you are a member of the military or the armed forces.

Close Your Mortgage Before Your Rate Lock Ends

Mortgage ratesMortgage rates fluctuate. The most recent movement sees a dip in interest rates on 30-year mortgages, the most common type of loan, at its lowest since the previous year. The best way to make sure you get the same interest rate that the bank quoted is to secure a mortgage rate lock.

A rate lock, according to migonline.com, gives you mortgage at the agreed-upon rate during the lock-in period. The lender adds that even when rates rise before closing, you will still get the lower interest rate.

Lock Period

Rate locks can last anywhere between seven days to 90 days. You can choose how long your rate lock will be. You can take into account any delays that may occur along the way. Sometimes, delays can even push your mortgage closing date beyond the rate lock period. In such times, you can ask for a rate lock extension that can cost you a fee of several hundred dollars.

Accomplish All Paperwork

You can make sure that you close your mortgage before any lock extension occurs, saving you from the hefty fee. You can fill out your mortgage applications quickly and submit them promptly. You can also submit any other documents your lender asks for immediately. You can have an easier time closing your mortgage when you finish all the necessary paperwork.

Follow Up on Your Mortgage

In addition to finished paperwork, you can also check your loan progress with your lender regularly. When you actively handle your mortgage, you can easily respond to any needed tasks. You can also easily check any incorrect information on your mortgage, sale contract, or closing date.

Negotiate with Your Lender

When delays happen, however, because of the seller, you can negotiate with your lender about a rate lock extension without paying any fees. You then have to ensure that your sale contract will include a clause indicating the seller’s responsibility for paying your lock extension fee. In other cases of delays beyond your control, you can also negotiate with your lender.

A mortgage lock can help you manage payments and stay safe from rising rates. But the rate lock also keeps you from taking advantage of low rates when they fall. There’s also the rate lock extension fee to think about. Considering the advantages and drawbacks of this feature, you’ll want to seek professional advice before committing to a loan agreement. This way, you don’t worry about rushing to close your mortgage to avoid paying an extension fee.

 

US Millennials Avoid the Stock Market but Invest Heavily in Real Estate

Man and woman looking at a tablet smilingMuch has been said about the financial behaviors of millennials – that they value experiential spending over more practical consumption, and they should be buying houses instead of avocado toast – but it’s something that only they can understand. As a witness to the Great Recession, millennials fear to take financial risks and spend money the way they know how.

However, millennials found hope in the Great Recession recovery of the real estate industry. The generation is ready to invest in rental and single-family properties, which is no small commitment, Americashousingalliance.com says. And there are reasons behind the skeptic generation’s trust in the real estate industry.

Great Recession Took Their Jobs

Many millennials graduated during the Great Recession, which brought them difficulties in job hunting. With the burden of student loan on their shoulders, millennials formed a rather negative impression of the stock market, one that prompted them not to get involved in that industry.

On the other hand, the Great Recession saw the burst of the housing bubble, but the industry recovered faster than the stock market. Seeing this upturn gained the trust of millennials, and 85% of the generation agrees that investing in real estate is a good thing.

Debunking the Avocado Toast Myth

A viral commentary on millennials’ financial decisions likened the generation’s spending behaviors to the consumption of avocado toast, and while it rendered laughs, the avocado toast debacle proved to be nothing more than a meme.

Despite buying and investing in homes later than their baby boomer parents, reports show that millennials arethe most active generation in the housing industry today, both as investors and buyers, with nearly 40% being under 36 years old.

This preference for investing in real estate than in the stock market can be attributed to the visual nature of the generation. Millennials are image-oriented – they like to know what’s happening and they want to see results. Stocks, being an intangible asset, are at a disadvantage in this aspect since they are hard to appraise and evaluate.

What the housing industry needs is to welcome the fast-growing number of millennials as their new investors. The skeptic generation trusts real estate as a good investment because of the security and tangible results the industry offers.

Understanding the Advantages of Asset-Based Loans

Businessman and BusinesswomanDue to a recent economic crisis, many companies are finding it harder to get approved for conventional loans because of stricter policies implemented by banks and lending companies. Many business owners have decided to use asset-based loans to meet the financial needs of their operations.

Tabbank.com shares more information about this financing option.

Asset-Based Lending In a Nutshell

An asset-based loan (ABL) is a type of secured loan for businesses where entrepreneurs use their assets as collateral in order to get the money they need. These assets include equipment, inventory, accounts receivable, and other balance sheet assets. Any business, small or large, can easily qualify for an asset-based loan as long as it has strong assets with stable balance sheets.

Benefits of ABL

Obtaining ABLs can be faster and easier than getting a traditional loan because it requires fewer documents, meaning there is less to process. As long as you meet all the criteria set by the lender, you are good to go. This is also a good option for companies that need an immediate source of cash flow due to financial struggles or when they are going through an expansion.

With an Asset-Based Loan, you are just using the value of your assets as collateral for a cash advance, which will be repaid with future invoice or sales payments. This way, your company stays debt-free.

Costs of ABL

Not all lending institutions charge the same fee. Some will charge higher than others while some will base it on how much the company invoice per month is. The fees associated with this financing option vary depending on the collateral value and the total loan amount. In most cases, the total loan cost is based on the annual percentage rate (APR) that can range from 7% to 17%.

ABLs generally have a higher interest rate than traditional loans, but their accessibility is more than enough to outweigh the higher costs, especially for companies that cannot qualify for conventional loans. Furthermore, not all lenders charge the same fees, so it’s best to shop around before settling for one.