Mortgage Rates are up slightly as Mortgage Backed Securities were lower this morning due to the rise in stock market and oil, but both have slipped into negative territory. Although the rally in MBS have not followed, I would expect them to if the losses in the stock market and oil continue to mount. Technically, MBS are battling a dual layer of resistance that could be shattered if the S&P drops below 1980 (it is currently trading at 1994).
Archives for December 2014
A pre-approval letter by a lender is one of the most beneficial documents that will help you in your quest for buying a home.
When you meet with Sean Z, you can discuss loan options and budgeting structure. We will be able to check your credit rating and inform you of any potential problems. Our unique “TBD Mortgage Approval Program” will give you confidence while looking for your dream home in St. Louis.
Obtaining a Pre-Approval Letter
As a home buyer, you should first of all be comfortable with the repayment structure of the loan you are applying for. You should never aim for the top of your spending limit from the very beginning. Many home sellers look for a pre-approval letter from the lender of the prospective buyer, since this document proves your ability to finance the purchase. The five documents that your lender requires prior to issuing a pre-approval letter are given below:
1. Proof of Income
Gone are the days when loans were sanctioned without any verification or documentation. Proof of income can be provided by your W-2 statement of the past two years which include your payment statements, additional income statements like income from alimony or bonuses, and your tax return statements of the past two years.
2. Proof of Assets
A lender will require your bank statements and investment statements to ascertain that you have the required capital to make the down payment and closing costs plus some funds in reserve. FHA loans require a down payment of just about 3.5 percent of the total cost, whereas down payment for a conventional loan is generally 10 – 20 percent. If you receive funds from a friend or a relative for helping you in making the down payment, you should also have a gift letter from the friend or relative stating that the said amount is a gift and not a loan.
3. Good Credit Score
The borrowers with the highest credit scores get loans at the lowest interest rates. A credit score of 740 or above gets you the lowest rate of interest on your home loan. Borrowers with a credit score of 580 and below are often required to pay a higher amount as down-payment. A credit score of 620 is preferred for an approval of an FHA loan.
4. Verification of Employment
Lenders are not always satisfied by the pay stubs provided by you. They may also call your employer to confirm your employment and what is your salary package. Borrowers with stable income are generally preferred by lenders as they are sure to recover their capital.
A copy of your drivers’ license and social security number along with your signatures will be required to pull up your credit report. You should be prepared to provide any additional paperwork that may be required for a smooth mortgage process. So keep these documents ready before you go shopping for a mortgage.
Call the Sean Z Mortgage team at (314) 361-9979 today!
Mortgage Rates are moving lower and could be heading for another dip. Mortgage Backed Securities and the treasury market are benefitting from the selloff in stock. We are seeing a flight to quality. Treasuries have dipped below the 2.2% mark, if that holds you could see them test 2% and thus mortgage rates improve.
Purchasing a property should be a well thought out decision for a couple.
The Sean Z mortgage team knows that buying a home is an event you have been dreaming of for years and we want to make it as enjoyable for you as possible. We know all there is to know about obtaining financing for this major purchase and are more than happy to pass our knowledge onto you. Here are some key considerations.
Pick the Right Mortgage
Today, choosing a mortgage is easier than it was a few years back, because the high risk mortgages that catered to unqualified borrowers are not available anymore. The choice available for borrowers today is between an adjustable and fixed-rate mortgages, choosing the right one based on their financial circumstances. With our “TBD Mortgage Approval Program”, you can be confident that you qualify before the search even begins.
Couples with dual incomes may secure a mortgage more easily. If a couple is looking at a low risk mortgage, then a fixed rate mortgage is the best option as the interest rate will remain constant throughout the duration of the loan. On the other hand, in case of an adjustable rate mortgage, the rates tend to fluctuate with the market conditions, and you may expect your monthly payouts to be low; however, it is likely that the rate would increase over time. So, your present and potential future earnings should be the key deciding factor while choosing between mortgages.
Location and Development
Your home is one of the biggest investments that you will ever make in your life, so it is important that you choose a property whose value is expected to appreciate over time. In deciding the value appreciation, location plays a huge role. If the demand is high in a particular area, but the available houses are few, then your investment may be secure.
Another important consideration is whether there is any scope of development or expansion of the home as an individual property. If you buy a house that meets both these criteria then you can expect to fetch a good price if you wish to sell it in the future.
Practical Considerations for the Future
Even though choosing the right mortgage type and good location are two extremely important considerations for home buyers, there are other important things that cannot be overlooked. Today, you might be a couple spending most of your time at work, but a few years down the line you may plan a family and you will need space for a growing family. You will need schools and play areas in close proximity to your home. So, while making a decision today, you must keep one eye on your future needs as well.
The Bottom Line
Couples have certain advantages over individual buyers when it comes to purchasing a home and securing a mortgage. However, it is extremely important to consider your financial circumstances and future plans when making this decision.
Call Sean Zalmanoff with USA Mortgage at (314) 361-9979 today!
Many Americans desire the security of home ownership. Hopefully with these new changes, that opportunity can become a reality for more Americans.
In the early days of the housing crisis, a proposal was drafted that would make lenders hold a stake in the loans that they sold. This specifically applied to mortgages that had a down payment that was less than 20 percent. The idea that the government maintained was that this would encourage more cautious lending.
However, this plan was opposed by both the industry and the housing advocates. Both sides felt that this plan would lock too many people out of the housing market because lenders would be forced to raise interest rates and fees on loans with low down payments.
A New Proposal
In October of this year, a milder version of the plan was decided on by six different agencies. These changes are in response to the fact that the housing recovery has taken a lot longer than it was expected to. It has been acknowledged that the tough regulations were forcing lenders to only lend to those that had exceptionally good credit. This new proposal will hopefully encourage lending to a wider population of borrowers.
In light of this new proposal, both Freddie Mac and Fannie Mae have said they may lower the down payment requirements to 3 percent. The FHA may also be on board to lower the fees that they charge borrowers.
This also means that banks will not be required to hold a stake in the loans that have less than 20 percent down. They will only have to do so on loans where the borrower has a high debt-to-income ratio. While these changes will take effect in about a year, they will not apply to Fannie Mae, Freddie Mac, or the FHA. This plan affects loans that have been sold to private sectors, agencies that do not have government backing.
Owning a Home in St. Louis
The history of home ownership in America is rich. Prior to the Great Depression, a minimum of 50 percent was required as a down payment. However, after WWII, the government wanted to encourage home buying by significantly lowering the down payment requirements. They dropped to as little as 5 percent down for certain loans that qualified. The amount of people who could now qualify and own a home soared. This trend lasted for many decades.
Owning a home is still something desired by many Americans. Hopefully with these new changes, that can become a reality for more Americans.
Sean Z has always made every possible effort to secure loans for St. Louis residents that they could afford. Having these new guidelines in place only solidifies our standard practices and gives borrowers more incentive to seek our TBA mortgage approval program. Call us today at (314) 361-9979.
Mortgage rates are again approaching the best levels of the year. The last time they were this low it lasted for only half a day, but that was due more to the Ebola scare than the market signal they are following today. If stocks make a significant move down you could see rates get better, but it if you are in the middle of a purchase or need to refinance it is hard to not lock into these great rates today.