Mortgage Guideline Tip - The Refi Process

Searching for information regarding refinancing? 
I have put together a quick summary of the process from application to closing below.  

The Application
After we determine that a refinance will be beneficial for you, we start the application.  Much like your original mortgage application, this one collects general information and asks for documentation of your income and assets.

Processing
Next, we'll gather property information with an appraisal, title reports, and proof of property insurance.  We'll also request a credit report and verify your income and your assets.

Underwriting & Approval
The underwriter makes sure all loan guidelines are met or exceeded by verifying the information we've provided.  A long checklist of factors must be satisfied during this stage.  Additional documentation may be requested or "conditions" may be placed on the approval.  Ultimately, the underwriter is held responsible for the decision made on a loan and must assure that anyone else picking up the file would come to the same conclusion.

Closing/Funding
After conditions placed on the approval have been satisfied, your loan is cleared for "docs" or closing.  Your closing package will be compiled, a closing disclosure will be approved, and then your closing will be scheduled and completed.  On loans for primary residences, a three-day rescission or waiting period must transpire between closing and the funding of the new loan.  After the rescission, your old loan will be paid off and your new loan will start.

Every property and situation is unique.  Many small steps may occur within the four categories, and even a small issue could temporarily derail the process.  Things may have changed since you originally financed your home, and the documentation needed today may be more extensive than it was when you first purchased your home.  Please realize lenders must take steps to satisfy guidelines that are designed to protect you and everyone else along the way.

If you have questions about the refinancing process, please call or email us today! We are here to help!

The Weekly Wrap Up - 80s Night at the Queen

 

Fed minutes show that members think the economy can handle a policy rate increase. Over 70% of economists now think the Fed will hike rates in December.

Markets have already started preparing for a Fed policy rate increase in December, contributing to recent mortgage rate increases.

Weakness in retail sales and producer prices make it unlikely that inflation will rise significantly. Low inflation can help mitigate a trend toward rising rates.

World Cafe Live at the Queen

Nov. 21. 2015
6 PM to 11 PM

Time to enjoy the 17th Annual Fall Auction Gala thrown by Autism Delaware.  Go back to the 80s with a fun dance party with live music and a silent auction.  Ticket are $95, which covers the live music, cocktails, food plates, and live and silent auctions.  Proceeds go to support Autism Delaware programs and statewide services.

There is complimentary garage parking in the Renaissance Center Garage of 5th Street, right next to the World Cafe Live.  For more information about the event or Delaware Autism click here...

Housing starts were down in October due to a decline in apartment construction. Overall though, the trend in housing starts has been steadily improving.

Highlighting the housing market's strength, building permits were up 4.1%. Permit activity portends more supply and healthy construction spending.

Homebuilders continue to remain upbeat about the market and outlook for real estate. Strong demand and limited inventory make new homes essential.

Mortgage Guideline Tip - Pre-Qualification vs. Pre-Approval

We often have conversations with our clients regarding the difference between a pre-qualification and a pre-approval.  Some clients believe that these are the same thing.  It is important to know that just because you are pre-qualified does not mean that you are pre-approved.

Pre-qualification

The process to get pre-qualified is extremely simple.  You have short conversation with your lender about your income, credit, and assets.  At this point credit is not pulled, only verbal information is exchanged.  The result of this will allow you, the borrower, to know what kind of housing payment you could be qualified for.  It is important to note that that number is not a definite.  This is because the lender if going off of all verbal information that you are providing to them, nothing is being confirmed. Due to that a pre-qualification does not mean the same thing as a pre-approval.

Pre-Approval

The pre-approval process is also fairly simple, but is more involved than the pre-qualification process.  During this process, information regarding your income and your assets will be collected.  Your credit will be pulled by your lender and then uploaded into an automated underwriting system that will grade your overall risk for the loan.  When this process is completed, you will have a more accurate idea of what you can afford, and you will receive a pre-approval letter for that amount.  You do not get a similar letter during a pre-qualification.  This pre-approval letter will give you purchasing power and you will be able to confidently make an offer on the house that you find that you love.

Pre-Qualification vs. Pre-Approval

I hope this paints a clear picture about the difference between a pre-qualification and a pre-approval. 

If you have any questions please call or email me!

The Weekly Wrap Up - A Community Favorite; Wilmington Beer Week

October's jobs report supports speculation the Fed will raise policy rates at the December FOMC meeting. Unemployment improved and job growth surged.

Steady jobless claims this week were further evidence of a healthy labor market and the growing likelihood of the long anticipated Fed policy action.

Mortgage rate markets are already moving in advance of the December Fed meeting. Increases so far are small and can actually motivate buyers to action. Wilmington Beer Week Friday Nov. 13th & Saturday Nov. 14th It is not too late to catch the end of Wilmington's 5th Annual Beer Week!  The week­long celebration will showcase a WBW-record 61 craft brew­eries while featuring din­ners, tap takeovers, meet the brewers and more. Delaware breweries will be promi­nent in that lineup, so look for the latest creations from 16 Mile, 2SP, Dogfish Head, Evolution, Fordham, Mispillion, Third Wave and Twin Lakes. Top regional brew­eries represented include Flying Fish, Heavy Seas, Lancaster, Stoudts, Troegs, Victory and Yards.  This is a great opportunity for residents in Delaware, Maryland, and Pennsylvania to have a fun and relaxing evening! For more information about times and schedules please click here.

Encouraging potential buyers to move off the fence, rents are increasing in all price brackets. Rents rose an average of 6.2% year-over-year.

A 12% rise in foreclosures in October is attributed to lenders acting before the holiday moratoriums. Foreclosures have been declining steadily for several years.

Purchase mortgage applications appeared unfazed by the recent climb in rates, improving .1% week-to-week. That's an 18% increase over this week last year .

Mortgage Guideline Tip - Waiting period for derogatory credit

Several of our clients come to us after some sort of mishap with their credit or previous mortgage.  Whether it was a foreclosure, short sale, or bankruptcy, they all ask the same thing.  When can I purchase again?

It is an important question for the borrower to know so that they can prepare.  The complicated part is that different derogatory credit requires different waiting periods, for different loans.  I have compiled a list that shows the waiting period that is required for each loan.

Conventional Loans - 

• Chapter 7 Bankruptcy - 4 year from the discharge or dismissal date
• Chapter 13 Bankruptcy - 2 years after the discharge date or 4 years from the dismissal date
• Multiple Bankruptcies - 5 years from the most recent discharge o dismissal date
• Foreclosure - 7 year waiting period is required, and is measured from the completion date of the foreclosure action as reported on the credit report or other foreclosure documents provided by the borrower
• Short Sale - 4 year waiting period is required

FHA Loans - 

• Chapter 7 Bankruptcy - 2 years from the discharge date
• Chapter 13 Bankruptcy - 1 year waiting period is required.  Plan must be paid out and discharged prior to closing.
• Foreclosure - 3 year waiting period from settlement
• Short Sale - 3 Years waiting period - Extenuating Circumstances apply

VA Loans - 

• Chapter 7 Bankruptcy - 2 years from discharge date
• Chapter 13 Bankruptcy - 1 year waiting period.  Plan must be paid out and discharged prior to closing.
• Foreclosure - 2 year waiting period from settlement
• Short Sale - 1-2 years waiting period.  If less than 2, a letter of explanation is required from the borrower and supporting documentation to establish an extenuating circumstance and to confirm the short sale was not due to credit negligence or taking advantage of a declining market

USDA - 

• Chapter 7 Bankruptcy - 3 years since date of discharge
• Chapter 13 Bankruptcy - 3 years from date of discharge
• Foreclosure - 3 years since settlement
• Short Sale -  None

If you are unsure what waiting period you fall into, please call or email me with any questions.

The Weekly Wrap Up - Kicking off the holiday season at the Nemours Mansion..

The number of economists predicting a Fed policy rate increase in December continues to rise. Markets are starting to prepare now, contributing to higher rates.

Although jobless claims recorded their largest increase in 8 months, they remain below 300,000. The overall sentiment is a healthy labor market, bad for rates.

Increased manufacturing productivity reported for the 3rd quarter signals economic improvement. A strong economy increases the likelihood of higher rates.

 Nemours Mansion & Gardens Holiday Tours

Kicking off this Saturday November 7th - Sunday January 3rd.
Every Tuesday-Saturday 9:30 am, 12:00 pm, and 3:00 pm
Every Sunday - 12:00 pm and 3:00 pm

The holiday tours at Alfred I. DuPont's former mansion are starting this weekend.  Enjoy the magic and elegance of the Nemours Mansion.  The beautiful Christmas trees with ornaments from the early 1900s to present day will inspire you this holiday season.  The tours are 2-3 hours long, showing you the mansion and the gardens.  This is a huge attraction to residents in Delaware, Pennsylvania, and New Jersey.  Read more about the tours and the mansion by clicking here...

At 9.3% of the market, distressed sales (including REO and short sales) continue to drop. If current trends continue, they will reach 2% of the market by mid-2018.

Home prices nationwide rose by 6.4% in September. CoreLogic's HPI forecast projects home prices will rise 4.7% year-over-year from Sept. 2015 to Sept. 2016.

Construction spending for single-family homes rose 1.3% in September. Private residential construction spending rose to the highest level since January 2008.

Mortgage Guideline Tip - Mortgage Payment and Cash to Close

When it comes down to it, as consumers, we all want to know the bottom line, the numbers.  It is important to understand what you are paying for something and why.

Two things that we spend a lot of time discussing with our clients is their monthly mortgage payment and their cash to close.  We provide a total cost analysis to all of our clients around the time they are pre-approved.  This analysis breaks down the the estimated monthly payment, and cash to close and are made to every client's unique situation.  So what makes up a mortgage payment?

A mortgage payment consists of 4 or 5 components.

• Principle - The part of your payment that goes towards paying the original amount of money borrowed
• Interest - The charge for the use of the borrowed money
• Taxes - These are assessed by your country.  The tax amount is specific to each house
• Homeowners Insurance - This insurance protects your home, you pay 1/12 of the annual amount each month
• Mortgage Insurance - This insurance protects the mortgage and may be required if your down payment is less than 20%

Closing costs can vary per transaction.  In addition to your down payment, here is a general list of what to expect.

• Lender Feeds
• Loan Origination - This is the total cost the lender collects to pay for the necessary items for your transactions, including processing, underwriting, closing, and flood certification.
• Appraisal - This fee is collected up front which goes to the appraiser so he can access the value of your new home
• Title/Attorney Fees
• Title insurance - owner's coverage and lenders coverage
• Survey of the home
• Settlement Fees - Attorney or Title company fees to complete legal services
• Government Fees
• Transfer Taxes - Each state will require a percentage of the sales price
• Recording Fees - State/county recording fees
• Prepaid items/Escrow Account 
• Property Tax
• Hazard Insurance
• Interest per day
• Mortgage Insurance (if applicable)
• Other (if necessary)
• Home owners association dues
• Radon test
• Pest inspection
• Well and septic test
• Home inspection

It is important to make sure your lender is knowledgeable in the area you are buying in to ensure your estimates are as accurate as possible.  If you have any questions about monthly payments or closing costs or would like a total analysis of your own, please contact me today!

The Weekly Wrap Up - The Not So Scary News!

Solid domestic consumer demand helped 3rd quarter GDP estimates to increase 1.5%. Strong economic news can lead to higher rates.

As expected, the Fed did not raise policy rates at this month's FOMC meeting. However, the statement contained language making a hike in December possible.

The four-week average for jobless claims is the lowest since 1973. A strong labor market helps strengthen the economy and could lead to higher rates.

Boo-B-Que by the Sea!

Friday Oct. 30th - Saturday Oct. 31
39415 Inlet Road
Delaware Seashore State Park
Rehoboth Beach, DE

This is a family oriented two day event that will include live music entertainment, craft, food and beverage vendors, rides and games, and more!  There will also be several competitions including Halloween decor competition, a costume contest, a wing competition, and of course, a youth and adult BBQ competition.  In state cost to get into the park is $5, out of state is $10.  Those with a seasonal state park pass are free!  Enjoy a great time and great food! Read more about the event here.

Have a fun and safe Halloween everyone! It looks like the weather here in Delaware, Maryland, and Pennsylvania will be perfect trick or treating weather and other Halloween events!

New home sales fell in September after two straight months of gains. However, the drop is seen as temporary, and demand for housing remains strong.

In fact, the homeownership rate rose between July and September, the first rise after 7 quarterly declines. Buyers under 35 years old had the highest increase.

First time homebuyers are depending less on gift funds for down payments. More young buyers are using personal savings for down payments and closing costs.