Tag: closing costs

The Mortgage Process: What Happens After Pre-Approval

Congratulations! You passed the pre-approval stage for getting a home, but what happens next?

Once you have a pre-approval letter from your lender, you can start looking for a home to purchase. Keep in mind that the letter is only good for 60 to 90 days, depending on the type of approval you received.

Why Should I Get Pre-Approved?

A pre-approval gives you an edge when shopping for a home because realtors and home sellers know you are already qualified to buy, according to a lender’s standards. It also means your time from agreeing to buy and closing will be faster, since approval is already done. During your search, keep the lender estimates in mind. It is an amount you can comfortably afford for a home. It is not advisable to go above it.

Once you have found a home that meets your needs and your pre-approval amount, you can start the sale process by giving the seller the pre-approval letter and making an offer on the house. If the seller accepts your offer, the next step is to start the underwriting process.

 

What is the Mortgage Underwriting Process?

Now that you have an accepted offer on a house, you will work with your loan officer to sign an official mortgage application. This will start the loan process and allow us to submit your application to underwriting for approval. If you have not yet provided the supporting documentation to verify the information on your application you will need to do this now. These documents will include income, assets, and credit documentation.

Required Documents to Apply for a Mortgage

  • Drivers License
  • Social Security Card
  • 1 Month Paystubs
  • Most Recent 2 Year W2 Statements
  • Most Recent 2 Years Tax Returns (if self employed or commission)
  • 2 Months Bank Statements
  • Most Recent Quarterly Retirement Statement
  • Home Owner Insurance Quote

(Additional Documentation may be required in Underwriting. Not all borrowers will need to present these documents – Ask us about our Automated Home Loan process where we electronically verify your information.)

Once your application is signed (we use electronic signatures to speed up the process), then your loan is submitted to an underwriting. The underwriter will review the information to confirm that it matches what was submitted on your application. They may have questions or request additional documentation at this time. Once your loan is “Conditionally Approved” in underwriting we will move to the appraisal.

What Happens During the Appraisal Phase?

An appraisal takes into account the interior of the home, the exterior, and the value of surrounding homes in the neighborhood. Once the appraisal is over, the loan can be processed. An underwriter will process the loan and clear the loan for closing. The appraisal must come in either greater than or equal to the value of the purchase price. If it comes in low you may need to bring additional cash or renegotiate with the sellers.

Once through processing, your loan will be scheduled to close. This is where you will sit down with an escrow agent or a notary to make everything official and legal. 

The Final Stretch: Closing Costs

The last part of the process, before you can start packing up your moving boxes, is the closing. Closing costs are what you pay for outside of the home itself. So, if you get an appraisal, the appraiser needs to be paid for their services. In addition, there is title insurance fees, taxes, tax services, and other fees that come with closing. These fees can range anywhere from 0-5% of the cost of the loan. 

If you negotiated that the sellers will pay these closing costs and pre-paid items then they will cover them at the closing otherwise these fees will need to be paid by you at the time of the close. If you are short on cash, ask your loan officer if you qualify for lender paid closing costs. This is where we will give you a credit at the close to cover some or all of your 3rd party fees. You will always need to cover your own down payment funds (unless a special program allows differently).

In summary, to start buying a home, the first step is the home loan pre-approval. Be sure to make an appointment with a Riverbank Finance professional loan officer today by calling (800) 555-2098.

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How to get pre-approved for a mortgage

Things to avoid when buying a home in Michigan.

If you are new to the home-buying process, you are probably aware that one of the best first courses of action is to get pre-approved before you start house hunting. So, you head to your bank or financial institution, but you have no idea what goes into the process of pre-approval. What do you need to get pre-approved? What should you expect? Here’s the low-down.

What is mortgage pre-approval?

First comes first. What is pre-approval, and why is it so important? Pre-approval is the first step to getting a mortgage. Your lender will take a look at your finances, your credit history, and your employment and determine whether you can afford to buy a home and, if you can, how much of a home you can afford to buy. That will help you narrow down your choices as you search for the right home within your budget. Getting pre-approved will also show home sellers and their realtors that you are ready to buy.

What do you need to get pre-approved?

To help the pre-approval process go smoothly, before you sit down with a mortgage professional, make sure you check your credit reports. Resolve anything negative, such as bills in collections, and dispute any errors. For most loan programs the disputes will need to be resolved and closed out prior to your loan application. This will give you the highest and most accurate credit score for mortgage qualifying. Higher credit scores will allow for a quicker loan process with lower interest rates.

Throughout the mortgage process, don’t apply for any new credit cards, don’t take on any new debt or make any large purchases, don’t close any of your current credit accounts, and don’t ask any of your creditors to lower your credit limit. These could significantly alter your chances of getting a mortgage.

Pre-Approval Document Checklist

  • Drivers License
  • Social Security Card
  • Most Recent 2 Years W2 statements
  • Most Recent 2 Years Tax Returns (If Self Employed or Commission Based)
  • 1 Month of Paystubs
  • 2 Months of Bank Statements
  • Quarterly Retirement Account Statement
  • Proof of 12 Month Rent History (may not be required)

For pre-approval, you’ll also need to provide documentation of the last two years of tax returns; proof of income including W-2s and pay stubs; a written referral letter from your landlord with some proof that you’ve been paying your rent in time (such as carbon copies of checks or money orders); two forms of government identification such as drivers license and social security card; and proof of income from other sources, such as government assistance and child support. Lastly you will need to document any assets. This will include any money you have in stocks, IRAs and retirement accounts. Also make sure the money for your down payment and closing costs are in the bank, ready to go.

Request a mortgage pre-approval by phone or online

Once you have gather the required documentation you can call a loan officer at 1-800-555-2098 to get start over the phone or apply online at https://riverbankfinance.com/app which is our online secure loan application.  A licensed loan officer walk you through the pre-approval process and help to review all available loan options.  Many times we are able to issue a pre-approval over the phone or online within minutes.

What happens when you get pre-approved?

Once you are officially pre-approved your loan officer will provide you with a Pre-Approval Certification. This document will state that we have reviewed your loan eligibility and have determined that you are likely to qualify for the loan program given. Your Realtor will ask for this document before you start shopping for a home. You may also want this updated prior to writing an offer on a home to make sure it matches your bid.

Related: Visit our Mortgage Calculators to estimate mortgage payments

So, when you’re feeling ready, come and visit us here at Riverbank Finance, and we can help you start the pre-approval process. Call us at 800-555-2098 to schedule an appointment with one of our professional loan officers. We want to help you get into your new home!

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How to Prevent Buyer’s Remorse

Forty-four percent of homebuyers end up regretting their purchase, according to a recent study by Trulia, a residential real estate website. The biggest regret? Not buying a larger home. If you’re entering into the home-buying process, you may be tempted to settle for less, especially if your budget doesn’t allow for a larger place. But keep these considerations in mind so you can prevent buyer’s remorse:

What should I consider when buying a house?

Don’t go into the buying process without doing some research and making a wish list. On average, Americans have been staying in their homes for 13 years, according to the National Association of Home Builders.

With that in mind, think about what you might be doing over the next 13 years: Will your family grow? Will you need space for an office? Will you need a larger yard for your children to play in? Will your kids be going off to college? Will you be retiring and needing less space? Will you need a one-floor setup for easy accessibility?

Your home is a long-term investment, so don’t just think about what you need now. Buy your home with the future in mind.

How much will my home appreciate?

When you find a home you love that meets your current and future needs, the next step is to calculate its appreciation over the next decade or so. You want a home that’s going to build your net worth, not depreciate over time.

Not sure how to predict whether a home will appreciate? First, consider its location. Choose a home that’s in a growing community and has a reputable school district. Second, consider the house itself and the property it’s on. Is the land desirable and without major issues? Does the house have sound structure (roof, walls, foundation)? Fixer-uppers can actually appreciate more than newly constructed homes if you’re up for the task of renovating, providing they don’t become a money pit in the process.

Did I get the best home loan?

When you buy a home, there are several types of home loans that you can consider.  If you have a large down payment over 20%, you may have selected a Conventional Mortgage to avoid PMI. Conventional loans typically have the lowest overall payment if you have higher credit scores and a large down payment. If you purchased using FHA financing, you may want to consider refinancing in the future to drop the Mortgage Insurance. Most FHA loans do not automatically drop this extra insurance premium.

Another consideration would be to confirm that you picked the best rate and cost combination for your home ownership goals.  Many lenders allow you to pay discount points to get a lower than market interest rate. If you consider this your “forever home”, then having a lower rate may save you a significant amount of interest over the term of your loan. Conversely, if you plan on selling your home within a few years you may want to select a loan option with the lowest amount of closing costs so you save money immediately on your purchase. Selecting the wrong home loan may cost you thousands and leave you regretting the extra costs.

See our Mortgage Amortization Calculator to estimate interest paid over the life of your loan.

How much will it cost to sell my house?

In looking toward the future, consider how much it will cost to sell your house. You may need to make repairs and upgrades to make your home more desirable. You’ll also need to pay your realtor commission (unless you’re selling by owner), which is usually 5% or 6% of the home price, and closing costs if the buyer doesn’t foot the bill (especially in a buyer’s market). As long as you plan ahead with these costs in mind, you won’t be surprised when it comes time to sell. If you buy a better house at the start, you may save a lot in the end.

Learn about our Home Renovation Loans to increase the value of your home.

For more information on how you can choose the best home for your needs, contact Riverbank Finance at (800) 555-2098 to schedule a meeting with one of our mortgage professionals.

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Are Adjustable Rate Mortgages Still Too Risky?

I know what you’re thinking: Why would I ever want to get an Adjustable Rate Mortgage? Isn’t it too risky? Sure, it could be. But there are actually some circumstances in which it might be the best option. Let’s look at the pros and cons of ARMs, and you can decide whether it’s too risky or just the right fit for you.

Benefits of ARM Loans

When you choose an ARM, your mortgage rates and payments start out lower at the beginning of your loan and have the potential to gradually increase over time.  Because of the lower payment at the outset, you could qualify for a larger or more expensive home than you originally thought possible.

If you are planning on selling your home in a few years, an ARM may be your best option because you can lock in your low payment at a fixed rate for three or five years. Having that low payment may save you thousands of dollars more than you would with a traditional fixed rate mortgage.

Let’s say your ARM monthly payment is $200 less than you’d pay had you gone with a traditional mortgage. If you decide to invest that $200 you’re saving, you could end up earning interest instead of paying interest on your monthly savings. 

Also, with an ARM, you never have to refinance your home. After the initial three or five years with the locked-in fixed rate, the interest rates could drop on their own without you having to pay closing costs and refinancing fees.

Downsides of ARM Loans

With an ARM, your mortgage rate typically fluctuates with the economy after the first three or five years, depending on what kind of ARM you choose. When the interest rate adjusts, so does your mortgage payment. Your payment may go up or down depending on the current rate environment at the time of your adjustment period. If rates go up, your mortgage payment may rise accordingly. For your protection, Adjustable Rate Mortgages have built in Caps which will limit the potential increases in the rates.

With one type of ARM, a negative amortization loan, the minimum monthly mortgage payments may not include the full interest amount so they can be more affordable for borrowers. So, the unpaid interest gets tacked onto your principal balance. In this case, you’ll end up paying more on your overall mortgage — even if you make all your payments in time.

Generally, ARMs can be confusing. Thankfully, the Consumer Finance Protection Bureau has created a great Adjustable Rate Mortgage Resouce Book that explains the ins and outs of how they operate.

If an ARM still sounds too risky for you, you can always opt for an FHA, VA, USDA rural development loan, or conventional 15 to 30-year mortgage.

As long as you understand how it works and plan your finances accordingly, an ARM could be a great fit for you. Schedule an appointment with one of our mortgage professionals at (800) 555-2098 for more information or to find out which kind of loan best fits your needs.

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Buy a Home with No Closing Costs

Buy a Home with No Closing Costs

An alarming number of first time homebuyers are unaware that mortgages involve closing costs, and which often creates a financial obstacle. Here, we’ll explain not only what closing costs are, but more importantly, how to avoid paying them!

What are Closing Costs?

Closing costs are additional fees a homebuyer is responsible for, outside of the down payment, at the time of closing. They include things like lender fees, title fees, government fees, and prepaid items such as property taxes and homeowner’s insurance. See below for a more conclusive list of closing costs you may encounter.

Lender Fees
• Credit Report Fee
• Application Fee (if applicable)
• Origination Fees (if applicable)
Appraisal Fee
Flood Certification Fee
Title Fees
• Chain of Title
• Owner’s Title Insurance (typically paid by the seller in Michigan)
• Lender’s Title Insurance
• Closing Fee
• Courier Fee
Government Fees
• Recording Fees
• Transfer Tax (typically paid by the seller in Michigan)
Real Estate Broker Fees (if applicable)
Prepaid Items
• Per Diem Interest
• Property Taxes
• Homeowner’s Insurance
• Tax Prorations (to reimburse the seller for taxes they already paid)

Related: Transfer Tax Calculator and Title Insurance Calculator

How Much are Closing Costs?

Closing costs vary based on factors such as loan amount, location (state and locality) of the property, and lender fees. Total closing costs typically range between 3-6 percent of the sale price. As stated above, not all fees apply in every loan situation. For instance, here in Michigan, title insurance and transfer taxes are typically paid by the seller.

Ask your buyer’s agent about what (if any) fees their brokerage charges for their services, as their administrative fees can range up to $500. Lender fees can also have a large impact on a homebuyer’s total closing costs. Here at Riverbank Finance, we don’t charge any additional lender fees for most loan programs! Be sure to ask your loan officer what fees you can expect to pay for their services.

Can I Avoid Paying Closing Costs?

There are several ways in which homebuyers can avoid paying closing costs. The most common way to do this is to request seller paid closing costs when writing an initial offer on a property. Each loan program is different, but allows for a percent of the purchase price to be given back– up to 3% on Conventional, 4% on VA, and 6% on FHA and USDA. For example, if you are purchasing a $200,000 home with a VA mortgage, you can request seller paid closing costs of up to $8,000.

Homebuyers should also speak with their loan officers about no-closing cost loan programs. By utilizing lender credits, buyers can reduce or even eliminate their closing costs altogether—ask your loan officer if you qualify for lender paid closing costs! Here at Riverbank we charge NO APPLICATION FEES and most of our loan programs have NO LENDER FEES.

Get More Information

To apply for a Mortgage or Refinance with NO closing costs, call Riverbank Finance today at 1-800-555-2098.

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How to Refinance a Home Loan

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Want to save money on your mortgage? Refinancing might be the best way to take advantage of the historically low rates. Depending on your goal, make make great financial sense to refinance your mortgage. Here’s what you need to know to make the best decision.

Benefits of Refinancing your Home Loan

Before you refinance your home loan, it is important to determine your financial goals. Do you want a lower interest rate? Do you want to change your adjustable rate mortgage to a fixed-rate mortgage? Do you want to pay off your loan in 15 years instead of 30? Do you want to lower your monthly payments? Did you know you can also refinance to consolidate a first and second mortgage? You can also extend your current loan to cash out if you want to start a business, help a family member in financial crisis, or go on an expensive vacation.

Do the math.

Ask your loan officer to help you figure out how much refinancing will cost you, and how much you’ll save over the long term. If refinancing will save you $200 per month, but you have to pay $2,000 in closing costs, you’ll break even in 10 months. How much longer do you plan to stay in the home? If you plan to stay there for more than 10 months, refinancing may be a good idea. If you’d like to move out sooner, the costs associated with refinancing may not be worth it. Also, if you lower your interest rate but extend your loan from a 15-year to a 30-year, you’ll lower your monthly payments but end up paying more interest over the life of the loan.

Talk to a loan officer to review your mortgage refinancing options.

If you decide refinancing is right for you, start by calling loan officer. He or she may be able to save you on closing costs and other fees by recommending a loan program specifically for your situation. Before you start the process it is important to do your research to find the best loan option to meet your goals. Do not just settle for what your current bank offers just because you have a car loan or checking account there; let your lender know that you’re shopping for mortgages so you can make an informed decision and perhaps he or she will find a way to offer a better deal.

Know your refinancing options.

Find out if you are eligible for any special refinance programs that may benefit you over the standard refinance mortgage. For example, if you currently have an FHA loan, you may qualify for an FHA streamline refinance, which would allow you to refinance with no appraisal, no income, and little to no closing costs. If you currently have a conventional mortgage, you may qualify for the Home Affordable Refinance Program (HARP), which may allow you to refinance, regardless of your home’s value, with no out-of-pocket costs.

Expect to gather documentation and paperwork.

Refinancing your home loan is a process that usually comes with a significant amount of paperwork to document your income assets and passed credit. Do not be overwhelmed by the request for documents with the current laws and underwriting guidelines. Even those with perfect credit have to provide the same documentation to get a home loan or mortgage refinance.

When you work out the details of your refinance mortgage, your loan officer will help you navigate the steps from initial loan consultation to closing. Be prepared to provide documentation, including driver’s license, social security card, one month of paystubs, two months of bank statements, past two years of W-2 statements, and your current mortgage statement.

Once you sign your application and send in the documentation, your loan officer will send in your file for underwriting, which may require additional documentation. You may also be required to complete a home appraisal. When you’re finally approved in underwriting, you’ll be cleared to close. Your loan officer will review the final figures, you’ll have to pay closing fees and documents, and then the process is complete.

Steps to Refinancing your Home Loan

1) Initial Mortgage Consultation
2) Sign application
3) Send required documents – (drivers license, social security card, 1 month paystubs, 2 months bank statements, past 2 years w2 statements, current mortgage statement)
4) Underwriting Process
5) Complete the Appraisal (if required)
6) Clear to Close – (once fully approved in underwriting your loan will be “Cleared to Close” and scheduled for closing)
7) Meet for the Home Loan Closing

For more information about what Riverbank Finance offers for refinancing, schedule an appointment with one of our loan officers by calling 800-555-2098 or fill out our online refinance application or by completing the form below.

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Bidding on Your First Home

Placing a Bid on a HomeWe recently covered the importance of selecting a real estate agent and becoming pre-approved for a loan.  The next step is to place a bid on the house you’d like to call “home.”  There are some things you need to first consider before making a bid, as you want to be sure you make an appropriate bid on the house.

Up first are your rights as a homebuyer.  One great benefit you have as the buyer is the right to have an inspector investigate the house.  By doing so, you’ll be able to establish a proper, initial bid.  Now yes hiring in your own home inspector will be additional fee but doing so could potentially help you save a pretty penny when making your bid.  You should also know that virtually everything is negotiable when buying a home.  Things like the closing costs and even appliances can be discussed to help save you even more money.

The next step is to sit down with a real estate agent and do your homework.  Meaning you need to consider the value of the area in your initial bid as you could end up with a great home.  If it’s located in a bad area or even a bad school district, you could easily end up bidding far more than necessary.  Luckily, this is where the real estate agent comes in to help take off a lot of pressure off your shoulders.  Part of their job is to research the area and provide you with all of the necessary information.

When making the initial offer be sure to consider additional items; would you like the owners to pay for the closing costs?  How about any home repairs needed?  Like a broken garage door or maybe the furnace needs to be replaced.  All things should be considered as your end goal is to save as much as possible on your potential new home.

Be sure to give your self some breathing room when making that first bid as well.  You don’t want to max out your price range right away, as the owners are likely to counter offer with a higher bidding point because they want to make money too.  Lastly you need to be patient.  Playing the waiting game is a big part of bidding on homes.  Unless a deadline is specified for the homeowners to come to a decision, they have virtually all the time in the world.  So if you have to wait a few business days, then so be it.  During that time it would be wise to maybe browse a couple other homes just in case a deal cannot be made.

With all things considered, bidding on a house can be a pretty big step so if Riverbank Finance could help you in anyway.  Be sure to let us know.  Need a recommendation regarding an inspector?  How about pre-qualification for a mortgage?  We can help with that and then some so give us a call at 1-800-555-2098 or fill out the email form below.

Help on your home bidding?

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