What is mortgage insurance?

Written by Ryan Morgan on . Posted in Buying

Business concept

Mortgage Insurance, also known as Private Mortgage Insurance (PMI) or MI, is a fee that you should be expected to pay if you are putting less than 20% down. Depending on the loan program that you are evaluating, there are different costs associated with your mortgage insurance. Essentially, with mortgage insurance, the borrower pays the premiums, but the lender is the beneficiary. The coverage protects lenders against default by the borrower. If a borrower stops paying on a mortgage, the insurance company ensures that the lender will be paid in full.

Your mortgage company will pick insurance providers for you, but it is paid by the borrower. Usually, it is done in monthly installments, but there are programs whereby the borrower pays the entire insurance premium in a lump sum at closing, or it can be built into your rate so there is no monthly expense. Ask your lender for options when it comes to MI!

What are the costs associated with buying a home?

Written by Ryan Morgan on . Posted in Buying

Toy house and calculator on table close-up

Typically, most people only calculate the down payment when anticipating the cost of buying their home. There are a few costs that you should be expecting to encounter:

  • Your down payment: depending on loan program, you can get into your home with as little as 3.5% down payment. Different loan programs allow for a variety of down payment options so be sure to ask your loan officer to examine all available loan programs that you are eligible for.
  • Closing Costs: There are always programs that will allow the lender or seller to pay your closing costs. If this is not part of your deal, you should be expected to pay these costs out of pocket. Your closing costs are dependent on your loan amount so ask your loan officer for a complete, detailed itemization of fees expected in conjunction with your loan.
  • Escrow Items: When you close on your home, you will be expected to pay into your escrow account. This is done so in order to ensure that as you pay your mortgage, your taxes and insurance are going to be adequately funded. On a purchase, you should be expected to pay 3-5 months of taxes into your escrow account and 2 months of homeowners insurance. This is calculated depending on where in the escrow cycle you fall when you close.
  • Taxes: If your loan closes within 45 days of the next tax payment being due, it’s likely that you will prepay these taxes at the closing in order for your escrow payment schedule to be on time.
  • Homeowners Insurance: You will  be required to pay your homeowners insurance in full prior to closing. This way there will be full coverage in place at the time you close.
  • Final adjustments from the town/seller: Typically, you will be responsible for any oil that is left in the tank, final water or sewer readings, condo fees and things of that nature with the seller.

Most people do not anticipate everything that is truly going to be included in the process, you should be prepared for these costs beyond simply your down payment and closing costs. Ask your loan officer for more information.

What fees go into your closing costs?

Written by Ryan Morgan on . Posted in Buying

Real Estate Closing Costs Mortgage

Many borrowers walk into the process asking the question of what exactly closing costs cover. This is VERY important to understand. Typically, included in these fees are the following:

  • Appraisal
  • Credit Report
  • Underwriting and processing
  • IRS verifications
  • Attorney fees (including title insurance, title exam, recording fees, etc)
  • Flood certificate
  • Plot Plan

When determining which program is best suited for you, ask your loan officer for a Good Faith Estimate, which will itemize all fees associated with the closing and provide you with a transparent reference point. You will want to know exactly which fees are being estimated at the time of your application and you want to be aware of any potential costs that you will incur.

What documentation should I have prepared when I am looking to be preapproved?

Written by Ryan Morgan on . Posted in Buying

The documents required in a mortgage application

One thing you want to ensure when you are starting your house hunt, is that you are getting a quality, accurate preapproval done by your loan officer. You should be prepared to have the following on hand:

  • Most recent 2 years tax returns
  • Most recent 2 years W2s
  • Most recent 60 days bank statements
  • Most recent statement for any 401K, IRA, or investment account
  • Most recent one month’s paystubs

There will most likely be additional information required depending on your unique situation, but that will largely satisfy the initial paperwork. If your loan officer is not asking for these items, you should be cautious! Part of the underwriting process is verifying your ability to repay the loan, and a large part of that is being able to verify consistent income and steady employment. If your loan officer is not analyzing your tax returns and the other documentation, you could potentially run into a problem in underwriting. Additional to these items, you should be expected to provide any business tax return if you are self employed, divorce decree or separation agreement and evidence of any other property that you may own. Your income, assets and credit will determine which loan programs you are eligible for so it is important to ensure there are no stones left unturned when you are evaluating your options.

The importance of a quality pre-approval when putting in an offer

Written by Ryan Morgan on . Posted in Buying

Home For Sale Real Estate Sign in Front of Beautiful New House.

When you are putting in an offer on your dream home, you may be the only prospective buyer or you may find yourself in a multiple offer situation. Any time there are multiple offers, it can be extremely stressful and competitive.
One of the best things you can do to make your offer stand out is have a thorough, complete pre-approval so that you are showing your strength as a buyer.

Often times, in multiple offer scenarios, your loan officer will get a call from the listing agent to verify the information on your pre-approval and ensure that they accept the best offer for their client.

As your loan officer, there are confidentiality agreements in place, so we can not share any of your information with the listing agent. But what we can do, is assure the agent that your credit has been pulled and is satisfactory, your pay stubs, tax returns and W2s have been reviewed as well and that your strength as a buyer is substantial.

It may seem trivial to most people, but ask any listing agent that you know and they will tell you the importance of your loan officer being accessible and responsive, starting as soon as you submit your offer!

How important is credit and what is the best way to monitor?

Written by Ryan Morgan on . Posted in Buying

credit score

In today’s mortgage market, your credit score is going to dictate everything from your down payment requirements, to your rate and your closing costs. You can not put enough stress on the importance of your credit score. Borrowers with lower credit scores are going to have limited options for their mortgage, and often times will pay higher interest rates on account of this.

The best thing you can do is have your credit pulled as soon as you are thinking of buying a house. There are several reasons for this, there may be information on your credit report that is not accurate or being misreported, and this may be damaging your score. It is best to address any issue similar to this and be able to increase your score and get yourself a better rate.

At Mortgage Corp East, we utilize a quick score program, where we can analyze your credit report and tell you if there is anything that can be fixed, paid down, etc in order to immediately boost your credit score. We often do this with numerous borrowers and the end result is a better rate for the client.

With the mortgage landscape these days being extremely credit sensitive, you can save yourself a significant amount of money both up front and over the long term if you are proactive in your approach to the credit piece of your mortgage application.

The best way to monitor your credit score is to consult directly with your loan officer. Certain website may not be reporting the same information that will be seen on your mortgage credit report so it is best to be proactive and eliminate any surprises.

How much of a down payment do you really need?

Written by Ryan Morgan on . Posted in Buying

Mortgage and down payment

One of the great parts of the current mortgage market, is there are many different loan programs. Each client has their own unique set of needs and goals with their house hunt, and these plans should be taken into account when choosing the right loan program for you.

You can get into an FHA Loan program with as little as 3.5% down, with 100% of your down payment being a gift. There are other loan programs where you can get in with 5% down as well.

The bottom line, there are a variety of loan programs available for you. Most people believe that unless they have 20% down payment, their mortgage options will be limited and this is simply not the case! Please consult your loan officer in order to review your loan options!

What you need to be prepared for when you begin your home search

Written by Ryan Morgan on . Posted in Buying

Preparation Leads to Success concept on a notice board

We often see people come in with a variety of different expectations when it comes to the home search and the pre-approval process. One of the most important things that will be a part of the process for you, is managing your expectations and being thorough.

The first step should be engaging with your loan officer. This will help guide you in the right direction as you search for your home and it’s important to know what’s available for you in terms of loan programs, down payment options, rates, closing costs and any other costs that may be associated with the loan. Closing costs will depend on the loan program you choose and there are several costs outside of your down payment that you should be expected to be prepared for. Once you’ve thoroughly reviewed your goals and available loan programs, you should move onto the next step.

If you are not working with a realtor, you should be! See KCM’s article on some of the reasons why here. Your realtor can provide a variety of services that you may not be aware of. Most people look online through various online databases when searching for a home, and there are many problems with this process. Your realtor can give you access to off market properties, local knowledge, and many other pieces of information that are not readily available. If you are not working with a real estate professional than you are doing yourself a disservice. If you are looking for a trusted real estate professional, but do not have one, please consult your loan officer for guidance.

Once you’re past this point, identify potential properties for your loan officer. This is helpful because it allows them to provide real scenarios for you and tangible numbers to review. You can see a variety of options for loan programs ranging from down payment, to rate, to closing costs, to prepaids and escrow items, to your monthly payment.

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Phone: 781.982.3500
Fax: 781.982.3511
Email: pboretti@mortgagecorpeast.com

Mortgage Corp East
MA Lender and Broker – MC2674
800 Hingham Street Suite 104N
Rockland, MA 02370