This could just as easily be called, “Top Tips for a Loan Approval” or “Don’t Make These Mistakes” but however you word it, there are some things that you absolutely must avoid when applying for a mortgage or while your loan is in the process of getting an approval. For a smooth closing and a stress-free process, here are some things you want to pay attention to.

Credit Inquiries

When you apply for credit, even if you change your mind and don’t complete the purchase, your credit report will note that some merchant or service provider looked at your credit report at your direction when applying for a loan. Say that you wanted to buy a new car and applied for financing at your bank but decided not to buy the new car after all. Even though you didn’t add to your debt you did create a question mark at the mortgage company.

The lender will see that you applied for credit but because it doesn’t show that you decided not to take the loan after all, the lender doesn’t have verification of that. Credit balances and monthly payments are reported to the credit bureaus every 30 days so the lender can’t verify whether or not you have a new monthly payment.

Okay, let’s now say you did buy that car and you can show your monthly payment to your lender, how does that affect your debt ratios? Buying anything on credit while your loan is being approved can mean you suddenly can’t qualify due to your new debt load. In ...

College Tuition On the Horizon?

Jun 25
Category | Blog

New parents at some point begin to hear the phrase, “save for college education.” Yet many don’t pay that much attention to it, especially if little Junior is still crawling around on all fours. There’s plenty of time to think about college, they say. And it’s easy to let that very important financial aspect of their lives slip to the back burner. After all, being a new parent provides enough new responsibilities as it is. But time rolls on and when Junior is now in high school and looking at colleges, parents find themselves wishing they had paid more attention to a college savings plan and wonder how to pay for it.

There are options, and for those without some sort of formal college savings vehicle the first place they might look is their own IRA, 401(k) or other retirement savings. And of course there are always student loans. But many don’t realize there’s another option and it’s as plain as the roof over their heads-- a cash out refinance.

Retirement Funds

Tapping into retirement funds for college expenses is something any financial planner will tell you is a no-no. Yet it’s not uncommon for someone to have a retirement fund of some sort yet not a separate college fund. It’s also not uncommon for someone to not have enough in a retirement ...

NJ Lenders - Mortgage Terms - New York New Jersey LendersWhen calling around for interest rate quotes or visiting any number of mortgage websites, you’ll typically see two types of terms listed, a 30 year rate and a 15 year. By far, the 30 year mortgage is the most popular but coming in second is the 15 year loan. Which loan term is better for you?

There are more 30 year mortgages than 15 because they’re easier to qualify for.  A 30 year mortgage payment will be lower than a 15 year. How much so? If you compare a 30 year rate of 3.75% and a 15 year rate of 3.50% on a $300,000 loan, the principal and interest payments are:

30 yr       $1,389

15 yr       $2,144

The 30 year loan payment is $755 lower than the 15 year mortgage even though the rate on the 15 year loan is lower. Yet the amount of interest paid over the life of the loan is considerably different. How much interest is paid over the full term of the loan?

30 yr       $200,164

15 yr       $  86,036

That’s the tradeoff. Yes, the payments are lower but the amount of interest paid on a 30 year loan is $114,128 more and while ...

That might seem such a silly question at first glance. After all, how many approvals can a lender actually provide? That’s a fair question but the fact is the approval process at a mortgage company is a path. When you’re absolutely, 100 percent approved, you’re in the “clear to close” category. Lenders are careful when issuing any sort of prequalification, preapproval or loan approval and make it clear that the loan application is fully approved only when the underwriter says so. Here are the different stages you can expect.

Prequalification. A prequalification can be issued with a 10 minute phone call with a loan officer. The loan officer will ask several questions about your income, your job, how much money you have available to close. You’ll also need to have a general idea regarding your current credit status, such as “excellent” or “average.” If you’re unsure, the loan officer can pull a credit report for you, something you really should have done prior to calling any mortgage company.

A prequalification carries very little weight as nothing has been verified. The purpose of a prequalification is to provide you with an idea of what you might qualify for, what your monthly payments could be and about how much money you’ll need at the closing table.

Preapproval. A preapproval is a prequalification that has been validated. The loan officer asks for such things as recent pay ...

How To Cancel MIP FHAFHA loans carry a government guarantee to the lender. Should the loan ever go into foreclosure, the lender is compensated 100 percent of the outstanding balance. That’s quite a benefit to the lender, as long as the lender approved the loan using current FHA guidelines. Yet this guarantee comes at a cost and is funded by an upfront mortgage insurance premium and an annual mortgage insurance premium, or MIP.

The upfront premium, currently 1.75 percent of the loan amount, is rolled into the principal balance and not paid out of pocket. The annual premium is paid in monthly installments. The annual premium amount will vary based upon loan term and down payment. Today, the annual premium is 0.85% of the loan with a 30 year term and a 3.5 percent minimum down payment. The premium for a 15 year loan with 5.00 percent down is 0.70%, for example. But FHA mortgage insurance premiums don’t always have to be forever.

Lender Requirements

Current guidelines for all FHA loans with case numbers issued prior to June 3, 2013, the annual MIP will automatically be cancelled on a 30 year note when the balance is naturally amortizes to 78 percent of the original value and the note is at least five years old. The annual premium is also cancelled automatically on 15 year loans when the loan balance falls to 78 percent of the original value. There is ...

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