What sets interest rates?

Written by Ryan Morgan on . Posted in Resources

Interest Rates Falling or Rising

There are several factors that impact what interest rate is available. On a personal level, your down payment, credit score and property type are the biggest factors. One a bigger scale, interest rates are set by investors via Mortgage Backed Securities. Two factors that are the most influential happen to be economic growth and inflation. The markets are set on the MBS level and then rate sheets are handed down to banks and mortgage companies.

To you, the borrower, that means your mortgage company or bank is not setting the market for the interest rates, and ultimately regardless of where you go, you’re going to get similar rates for most products. Not all banks and companies have access to a full variety of programs so it’s important to understand the dynamics of each individual program in order to decide if it’s the right fit for you.

One advantage that mortgage lenders and brokers have over your local bank, is that they see rate sheets from several investors, so they are able to shop your deal around and so who has the best program and rate for you as opposed to banks, who have access to their products and their products alone.

What documents can you expect to have ready in order to obtain a quality pre-approval?

Written by Ryan Morgan on . Posted in Resources

 

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It is extremely important that when you receive your pre-approval letter, due diligence has been done. Part of the underwriting process, and a large part at that, is examining your income and documenting the most recent 2 years of employment in order to prove you have the ability to repay the loan. Some people’s pay is simple and straight forward, some people’s are not so it is important for your loan officer to review all of your tax documentation from your W2s and pay stubs, to your tax returns (all schedules!) If you are paid a salary, it is viewed differently than commissioned income, bonus income, etc and you want to ensure that the income being used to calculate your pre-approval is accurate and verified.

Below is a list of the items you can expect to provide:

  • Most recent pay stubs (one month’s worth, consecutive)
  • Federal tax returns and all schedules
  • W-2’s
  • Bank statements for all accounts for the last three consecutive months (savings, checking, passbook, stocks, 401K, IRA, mutual funds, etc.)
  • Employer’s names, addresses, and phone numbers for the last two years
  • Book and page number and deed of subject property
  • Purchase and sales agreement on the house you are buying
  • Purchase and sales agreement on the house you are selling
  • If self employed, a year to date profit and loss statement
  • For a corporation/partnership, the last two corporation/partnership tax returns
  • Loan information on any other real estate owned (mortgages, copy of lease, copy of insurance bill, most recent tax bill)
  • For Virginia: DD214 or VA certificate
  • If divorced, separation agreement and one page NISI
  • If bankruptcy has been declared, all bankruptcy documents
  • If building, a copy of the plans and specs for appraisal

In addition to this, we may be required to have your employer supply a verification of employment form, itemizing pay. Also, remember to bring your application fee. Single family fee: $450. Two family fee: $575. Pre-approval: $0. Your application fee will be credited back at closing.

What programs are available for a multi-family home?

Written by Ryan Morgan on . Posted in Resources

 

Georgian Style Duplex House in Savannah Georgia

Multi-family homes, whether it be a 2 unit, 3 unit or 4 unit are a popular and effective way to build wealth and equity. If you are buying a multi-family home for investment purposes and do not intend on living there, you are most likely going to need to put 25% down to satisfy Fannie Mae and Freddie Mac requirements.

If you plan to occupy one of the units as your primary residence, you can get into a 2 family with 15% down on a conventional product and as little as 3.5% down on an FHA product for a 2 family, 3 family or 4 family.

This allows great flexibility for the prospective buyer. A big advantage for an FHA product on a multi-family is fairly obvious where you are allowed to have a much smaller down payment. The other is the rates are significantly lower in most cases. Typically on conventional loan programs, there is an adjustment to rate for a 2 unit, 3 unit or 4 unit property. On FHA multi-family properties, you do not have the same rate adjustment. Whether it is a single family, condo, 2 unit, 3 unit or 4 unit FHA offers the same rate for you the borrower. Consult your loan officer for more information.

What if I cannot find my tax returns or W2s?

Written by Ryan Morgan on . Posted in Resources

W-2 Form

You may have recently moved, or simply misplaced your tax documents for years prior. This is not a terminal problem. Your CPA typically has easy access to your tax records. Your employer has access to your W2 documentation and should neither of those plans work for you, you can contact the IRS directly for a copy of both your W2s and your federal form 1040.

If you are unable to locate any tax documentation from the prior 2 years, please contact the IRS and request a copy of your prior year’s tax forms.

How do you obtain FHA financing on a condo?

Written by Ryan Morgan on . Posted in Resources

 

Apartment Building

If you are in the market for a condo, FHA financing might be a great option for you. Most people are not aware that if you are putting down less than 25% on a condo, there is a rate adjustment that you’ll be facing. Typically it is 75 basis points (usually equates to 1/4% in rate), but depending on FICO score it can be more significant than that. FHA is a great way not only to get into a condo for 3.5% down with NO rate adjustment, but to have more flexibility for rates and closing costs, allowing you to make the right choice when it comes to your loan selection.

What happens when the condo you are looking to finance is not FHA approved? This is not a terminal problem, FHA approvals typically last for 2 years. If your prospective condo is not approved, we have experience in getting your project approved. The process entails collecting the required documents that FHA reviews and submitting those documents to the local field office for underwriting and approval. Typically, this process takes about 30 days once submitted.

If you are looking to buy a condo and you want to explore FHA approved projects, consult your loan officer to examine your options. FHA may or may not be the best choice for you, so it’s important to examine your options and ensure you’re pursuing the best loan program for you.

Find a list of approved FHA condo’s in your area.

What to know about VA loan programs

Written by Ryan Morgan on . Posted in Resources

 

Family Welcoming Husband Home On Army Leave

Many people view VA loan programs with skepticism and uncertainty. This simply should not be the case as the VA offers one of the best loan programs around and we at Mortgage Corp East are proud to have VA loans be a significant portion of our business.

The VA loan program offers a no money down loan option with no mortgage insurance required, and is often on par or below conforming rates. Often times veterans walk into our office unsure of what program is best and if they should even bother looking into a VA loan because of the stigma attached. 99% of the time, it is the best loan program for our client.

The only caveat to the VA loan program is there is a VA funding fee, which depending on the amount of times you use the program can be north of 2%. However, the VA funding fee is allowed to be financed into your loan amount so you do not pay it out of pocket. An example would be if you are buying a home for $400,000 and the VA funding fee is 2.25%, your end loan would be $409,000. However, if you are deemed to be 10% or more disabled from your service the VA waives your funding fee. The majority of veterans do collect some type of disability whether it be large or small, so more often then not we can put you into a loan program with no money down, no PMI and no funding fee. It’s truly a great deal and a great service to offer for our military veterans.

If you are anticipating a VA loan, there are certain additional requirements that need to be met. The major requirement is a wood eating insect report, to establish there is no damage to the structural integrity of the home. Please have this form completed with your home inspection.

The other form you should have handy is a copy of your DD214. If you do not have one, contact one of our loan officers for instructions to obtain a copy.

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

Mortgage Corp East
NMLS 2674
800 Hingham Street Suite 104N
Rockland, MA 02370

 

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