Applying for a home mortgage is a relatively easy process. However the information needed to obtain home loan approval in a timely manner requires a coordinated effort by the borrower and lender. The mortgage loan application is prepared by lender with the borrowers input and takes about 30 minutes to complete. The lender then gives the application to a loan processor, who organizes the information. The processing of the application may require additional information for verifying employment, bank balances or other information. This information is often obtained at the time of application and can help speed up loan approval.

During loan processing, some of the items requested may include the purchase contract for the home, if the home loan is being obtained to buy a home. Updated bank statements or investments that may have changed in value may also be requested. If a borrower is self employed or is in a specific career (Doctors, Nurses, Police & Fire, Teachers, Military & Veterans, Pharmacists & Dentists), then tax returns and/or Profit and Loss statements for the past 2 years may also be required. Depending on the personal home loan needs of the borrower and down payment amount, evidence of past mortgage or rent payments, divorce settlement papers, and gifts provided by a relative or a non-profit down payment assistance program may also be needed.

Simultaneously, an independent appraisal of the home is ordered. The appraisal is needed by the lender to establish the maximum amount a lender will loan based on the home’s appraised value. The loan processor is assembling and organizing the borrower’s financial information in an organized manner to present to an underwriter. The underwriter will review the information to determine if the borrower meets the guidelines for making the home loan. Once approved, a commitment letter is provided which states that the lender will make the loan based on the specific conditions determined in underwriting.

The whole process generally is completed in 30 days or less. Speeding up the mortgage process is a simple easy three step process.

Applying for a home mortgage is a relatively easy process. However the information needed to obtain home loan approval in a timely manner requires a coordinated effort by the borrower and lender. The mortgage loan application is prepared by lender with the borrowers input and takes about 30 minutes to complete. The lender then gives the application to a loan processor, who organizes the information. The processing of the application may require additional information for verifying employment, bank balances or other information. This information is often obtained at the time of application and can help speed up loan approval. 

 

During loan processing, some of the items requested may include the purchase contract for the home, if the home loan is being obtained to buy a home. Updated bank statements or investments that may have changed in value may also be requested. If a borrower is self employed or is in a specific career (doctors, nurses, police & fire, teachers, military & veterans, pharmacists & dentists), then tax returns and/or Profit and Loss statements for the past 2 years may also be required. Depending on the personal home loan needs of the borrower and down payment amount, evidence of past mortgage or rent payments, divorce settlement papers, and gifts provided by a relative or a non-profit down payment assistance program may also be needed.

 

Simultaneously, an independent appraisal of the home is ordered. The appraisal is needed by the lender to establish the maximum amount a lender will loan based on the home’s appraised value. The loan processor is assembling and organizing the borrower’s financial information in an organized manner to present to an underwriter. The underwriter will review the information to determine if the borrower meets the guidelines for making the home loan. Once approved, a commitment letter is provided which states that the lender will make the loan based on the specific conditions determined in underwriting. 

 

The whole process generally is completed in 30 days or less. Speeding up the mortgage process is a simple easy three step process.

The mortgage industry and banks in particular are reeling as a result of their inability to sell home loans they originated to investors. The concern centers on current economic conditions and declining property values in many markets. Consequently, the Federal National Mortgage Association (FNMA) has instituted specific guidelines to reduce credit and collateral risk to lenders.  

The term “Declining Market” is determined by appraisers and utilizes various data sources including national and local information. If a home is determined to be in a declining market, the maximum home loan amount that can be borrowed is reduced by 5% of the revised appraised value of the home. This simply means that a buyer must increase their mortgage down payment by 5%. The declining market rules are rather subjective, which means that declining markets can be defined within a city or suburb, or even a neighborhood.  

Both home sellers and home buyers should be aware of the ramifications of the declining market adjustment before an offer is made and accepted. An experienced mortgage lender familiar with the declining market underwriting process is essential for a home buyer before an offer is made. 

If your ability to purchase a home with a conventional loan is adversely affected by these changing conditions, NextHome Mortgage has a variety of home loans that can reduce the amount of money required as a down payment. Start your search by visiting our Mortgage Home Loan page.

Selling a home has been relatively easy in prior years. The challenge typically was finding a new home to buy. Many sellers refused to sell their existing home until they found a replacement.

Buying first worked well for many sellers in years past as the risk of owning two homes for a long period of time was relatively low.

Now there is substantial evidence suggesting that the real estate market is slowing with supply now exceeding demand. If so, is it still a good idea to buy before selling?

First, consider the alternatives. If you buy first, you will know where you’re moving, what it will cost and when you can move. Families with small children often find it easier to market their old home after they have moved out. Their home can then be prepared for sale and kept that way with little, if any, effort.

The downside to this approach is that it’s expensive. You must come up with cash for a down payment and closing costs before your home is sold. Many homeowners do not have the extra cash in savings to accomplish this. Some homeowners may tap into their home equity before selling by using an equity line of credit.

House Hunting Tip: In a changing market, it’s wise to factor in a longer marketing period for the home you’ll be selling. You could get lucky and sell quickly. However, in a soft market, it usually takes longer for homes to sell. It’s far better to err on the conservative side than to be caught short of cash making mortgage payments on two homes.

The biggest risk you face in buying before selling is that your home doesn’t sell in the desired time frame and the market worsens. In this case, you could be forced to reduce your list price in an attempt to speed up the selling process.

An option may be to rent your old home until the market improves. But, keep in mind that to take advantage of the federal capital gains tax exemption on the sale of a primary residence (a $250,000 exemption for single sellers and $500,000 for married sellers who file jointly), you need to have occupied the property for two of the last five years.

Homeowners who can’t qualify to buy before selling, or who don’t want the anxiety of owning two homes, have other options. The most appealing is to buy the new home contingent on the sale of your home. Unfortunately, sellers of the most desirable homes usually don’t look favorably on contingent sale offers. A local real estate agent will be able to tell you if contingent sale offers are a viable option in your area.

If not, consider selling your home with an option to rent it back from the new owners for a time after closing. This will give you extra time to find a home to buy if you haven’t found one by the time your sale closes.

Typically the seller’s rent covers the buyer’s costs of ownership during the rent back period. This may be more than you paid to own your home, particularly if your home has appreciated substantially and the buyer is taking out a large mortgage.

The Closing: Renting your home back from the buyer after closing is done for convenience sake. If you want to pay cheaper rent, you can always move to a temporary rental until you find your dream home.

It’s easier to sell a home and enjoy a smoother move when you follow a moving checklist. Here are some tips and suggestions for creating your own checklist, and making your move as easy as possible:

Get estimates from movers a few months before you sell your home, and decide on a favorite. Then inventory your household items for insurance purposes. This is also a great time to get rid of clutter.

When you’re a few weeks out from moving, push the following items up on your moving checklist: Schedule service disconnections for utilities, and call your insurance company to find out how your belongings are covered during your move. Arrange for storage space, if necessary.

Approximately two weeks before you move, plan a moving sale for those items you won’t be taking with you. Also collect – and protect – your important records including legal and financial documents, medical records, school records, birth certificates and passports.

Within a few days of moving, ensure you’ve properly disposed of all things you aren’t bringing to your new home, including dangerous and flammable products.  Remember to drain gas and oil from machines such as lawn mowers, as well. If you live in an apartment, make arrangements to use of the service elevator, and shore up daycare arrangements, if necessary.

A few more things to add to your moving checklist after you sell a home:

• Cancel newspaper delivery
• Return borrowed/loaned items
• Transfer medical prescriptions
• Send out change-of-address notifications as needed
• Transfer bank accounts and settle up bills
• Pack a travel bag.

Moving in

Here are a few tips to help you after you sell a home and begin your physical move:

• Inventory your belongings after the trip
• Connect utilities and make sure your appliances are all working
• Make sure you are registered with the local post office
• Get new driver’s license and tags for your automobiles

Making a moving checklist is a smart idea after you sell a home. Consider building your own checklist to make your move a good one.