All Square Mortgage Tacoma NMLS ID 1252404

Every refinance loan requires us to show how the new loan benefits the borrower. In most cases, the benefit to a rate/term refinance is lowering the payment. But there are other reasons, such as reducing the loan’s term, refinancing from an adjustable-rate loan to a fixed-rate loan (considered less risky), removing mortgage insurance, combining a 1st/2nd combo into one loan, or adding/removing a borrower from the loan. In the case of a cash-out refinance, the benefit is receiving cash from the equity in the property. Each loan type has a specific guideline for the benefit to the borrower.

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A balloon payment is a larger than normal one-time payment structured at the end of a loan term. Loans with balloon payments are considered non-QM because there will be a lower than normal monthly payment for the life of the loan and then a large lump sum at the end that borrowers may have issues paying for.

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Automated Underwriting System, or AUS is a software developed by FNMA (Fannie Mae) and FHLMC (Freddie Mac) that is used to approve borrowers. FNMA uses DO (Desktop Originator) and DU (Desktop Underwriter), FHLMC uses LP (Loan Prospector). For FHA or VA loans, either is acceptable. Note that algorithms for FHA/VA are far more lenient.

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A cash reserve, also referred to as a mortgage reserve, is the savings you’ve set aside for emergencies. Lenders can require you to have two months of mortgage payments on hand in case of emergency.

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Assumable Mortgage is a type of mortgage that may be entirely assumed by a person other than the original borrower. FHA mortgages are typically assumable while most conventional mortgages are not. Most buyers need to qualify for an assumable loan. Assumable loans are more attractive in high interest rate environments after rates have climbed significantly (buyers have a desire to assume a loan taken out in years past when rates were much lower).

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The truest cost of a home loan is the APR, or Annual Percentage Rate. This is a recalculation of a borrower’s effective mortgage interest rate that includes closing costs as well as the interest borrowers will pay on the loan. These closing costs can include origination fees, points, escrow fees and mortgage insurance. The APR may be somewhat misleading on loans that require large mortgage insurance premiums, like FHA loans. APR quotes are required, however, to prevent lenders from quoting artificially low interest rates to attract business and then charging substantial fees to cover the cost of the low rates. Per the Truth in Lending Act, all mortgage lenders must disclose their APR.

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Ability to repay is a rule from the Truth in Lending Act. Here’s how the CFPB defines it: “The reasonable and good faith determination most mortgage lenders are required to make that you are able to pay back the loan. Under the rule, lenders must generally find out, consider, and document a borrower’s income, assets, employment, credit history and monthly expenses.”

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Mortgage Terms: (Liquidity) The availability of wealth or savings that can be easily liquidated – meaning converted to cash or cash-like assets. Someone might own 25 properties with over $10M in total assets yet have extremely low liquidity, simply because all their wealth is tied up in those properties. Selling a property takes time, hence it’s a relatively “illiquid” form of investment compared to a brokerage or money market account.

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Understanding the different mortgage terms is helpful. Whatever you choose can potentially save you thousands of dollars throughout the life of your home mortgage. Make sure to ask questions so you fully understand. Your lender will always be happy to help answer any questions you may have.

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Home Inspections are of great importance when buying a home, especially if the property is not newly constructed. Although this is an extra expense that many first-time homebuyers do not foresee, it would be wise to do. Professional inspectors are more likely to see things you won't. Areas of the home that need repair will allow you to negotiate with the owner and make offer price adjustments when needed.

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There are two main mortgage types: Conventional loans guaranteed by banks or private lenders and Government-backed loans that the government supports. In these different categories, there are various loan options. The loan type you choose can affect what is required for qualifications and how much is needed for a down payment. Speak with your lender to find out what options work best for you.

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If you're establishing credit from scratch using a credit card, there are a few key tips you'll want to keep in mind so you can improve your chances of being approved for a mortgage. Always make your payments on time. Set up an automatic payment if necessary to make sure you don't miss a payment due date. If possible, go above and beyond your minimum payments. Minimum payments come with interest charges, so pay off your balance each month to help you get the best scores. Finally, be careful to not apply to too many credit card companies all at once - it can make your financial situation look worse than it is, and this may harm your score.

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Down payments can be tricky to navigate when taking out a mortgage. Of course, if you have saved up the funds for a 20% or more down payment, this is going to greatly improve your chances of being approved, with lower monthly payments. However, it's not required to have such a large lump sum up front. Most lenders require less, and some government-backed programs allow mortgage applications with as little as 3.5% down.

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If your credit history is low and you're hoping to improve it so you can buy a new home, you may have run into issues where you've been declined for a credit card application. If this is you, don't worry, there are alternative options. Although it won't have as much of an impact as a credit card, try applying for a store credit line with a small, local company and make sure you're keeping your utilization low, and paying it off regularly.

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There are a few key factors that lenders will take into account before approving you. Mainly, your current financial situation and the amount you’re regularly spending on your outgoings. If you’re in a good financial position, including credit score, current debt, income, outgoings, and haven’t made any recent large purchases, you’re more than likely to be approved for a great mortgage so you can buy your dream home!

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Mortgage insurance helps protect a lender if a borrower forecloses on their property, which allows lenders to grant loans that they may not do otherwise, since borrowers are paying extra for the insurance. If your down payment is less than 20% of the home’s value, mortgage insurance may be a firm requirement.

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Whilst it’s amazing if you’re able to receive a cash down payment gift from your family, it’s also important to remember to notify your lender of this information. Keep a paper trail of all large financial transactions so they won’t be questioned later, holding up your mortgage application process.

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There are certain financial decisions that you shouldn’t make before applying for your home. Suddenly paying off all of your debts, or taking out a new car loan on finance, can have huge impacts on your ability to be approved for a mortgage. Major changes to your credit report can be a red flag, so keep any big expenses until after you’ve bought your home.

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Applying for a mortgage can be a simple process if you know what paperwork you need and can provide any additional information your lender needs to know. Once you’ve compiled your financial documents, you provide those to your lender and fill out an application. Your lender will then evaluate your application before scheduling an appraisal and performing a title search to ensure that the home you’re buying will be fully yours.

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Taking care of your credit should be one of your top priorities when you're looking to take out a mortgage. You should always be aware of your current credit score and the factors that could be impacting it. One of the best ways to do this is to sign up for a credit report service. There are many available, so make sure to do your research before signing up, especially because you'll be giving personal information to gain access to your report.

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Debt-to-income ratio is one of the most important financial aspects when it comes to applying for a mortgage. If you take your total monthly debt repayments and divide that figure by your gross monthly income (pre-tax), you'll have your DTI. As a general rule, the lower the DTI, the better. However, some lenders allow buyers with around 45% DTI to qualify for a mortgage loan.

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Income and debt ratios are a key piece of financial information to keep in mind when applying for a mortgage. Your income ratio is the total housing expenses divided by your pre-tax income, per month. Whereas your debt ratio is your total monthly housing expenses plus any recurring debts such as car payments, credit card payments, pay day loans or other loan payments, divided by your monthly income. Whilst having credit card payments can sound like a negative thing, having zero credit to your name can also look bad to a lender. Utilize your credit carefully and make regular payments to ensure your credit report shows you’re a responsible buyer.

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If you’ve recently got a new job, it may impact your ability to get a mortgage loan, but don’t let that deter you. Let your loan officer know your situation and provide any paperwork you can to back up your change in employment. Most lenders are ideally looking for two-year history in the same field or company, though recent college graduates may not need this.

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Raise your hands.

Who are my Veterans that are currently paying 6.25% rate or higher on their current mortgage?

Although there are a huge range of different mortgage types, the most common is the 30-year fixed-rate mortgage. This means that you would have 30 years to pay off the loan, usually in the form of monthly payments, with an interest rate that doesn't change over the lifespan of the mortgage. Your mortgage payments will always be the same each month and you don't need to worry about overall interest rates rising.

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When you take out a mortgage, you do own your home - congratulations! However, there are some parties that have some rights to your home until your mortgage is fully paid off. If you stop making your mortgage payments, for example, your home may be seized by the mortgage lender and sold to make back the money they lent you. There isn't any need to worry, however, as your home will be perfectly safe as long as you take care of it and keep up with your mortgage payments.

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Making small, important changes to your credit can help it build slowly over time. Building your credit can be frustrating, as it does require financial responsibility over a longer period of time, but by being aware of your score and the factors that are influencing it, you can set yourself up for long-term financial success and eventually, home ownership.

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You may hear people talking a lot about credit scores, but what exactly does that mean and why is it important for taking out a mortgage? Essentially, credit scores are the numerical representation of your financial situation. How much debt you have, whether you responsibly make payments and how you manage your credit accounts all play a part in your credit score. When it comes time to apply for your mortgage, your credit score will be a huge factor so make sure you know where you stand.

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Real estate is a big factor in net worth. Even with a mortgage, owning a home can still contribute to net worth. According to data from the Federal reserve, the average homeowner has a net worth 2.8 times the net worth of the typical person who doesn't own a home. https://bit.ly/3AW4aS6

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In the lead-up to applying for your mortgage, you’re going to want to make sure that all of your ducks are lined up to make the process go as smoothly as possible. Keep all important financial paperwork readily available, even if you think you don’t need it. Lenders can request specific pieces of information so compile all of your paperwork together and keep it somewhere that is easily accessible.

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