Tag: home loans

Hundreds of Mortgage Options

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As local mortgage experts, we are here to help all types of families. We do mortgages. Only mortgages. We do not offer auto financing or credit cards. This allows us to be experts at what we do and have many types of mortgage options for all financial situations.

If you have a unique financial situation, there is no better spot to get a loan than a local mortgage broker. We can shop rates and mortgage programs at multiple banks and underwriting companies at once.  This insures that you will receive the best mortgage package available for your situation.

Low Rates. Low Costs. Expert Advice

To get expert advice, call us at 1-800-555-2098 or simply apply online below. We are happy to help!

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8 Common Mortgage Questions

For some, buying a home can be a scary experience, but it doesn’t have to be. The first step of the homebuying process should be to do research. Researching is one of the most important things that future homebuyers could and should do. Here are some commonly asked questions about mortgages and the homebuying process.

1. Am I able to get a mortgage if my credit is not that great?

Even if your credit score is not the greatest you may still be able to qualify for a loan. Having a higher credit score is beneficial though as it allows for buyers to get better interest rates. This saves them from paying thousands of dollars more than someone who has a low credit score. The minimum credit score for conventional loans is 620, while the minimum score that the FHA, VA Loan, and USDA Mortgage will allow is 580. That being said, lenders have their own minimum scores that they will accept.

2. What type of home loan is best for me?

It all depends on your situation. If you have a high credit score and money for a down payment, conventional would probably be a good choice for you. At Riverbank Finance, we have loan options that will pay up to 2% of the 3% down payment requirement if the client has a credit score of 720 or higher for conventional loans. This is great because then it means you only have to put 1% down on your home.

If your credit score is between 620 and 720, the down payment can be as low as 3%. If your credit score is not that great, a FHA loan would probably be the best for you, but you will need a 3.5% down payment. A USDA loan is great for those who are looking to live in a rural area and want to put zero down. Veterans can apply to get a VA loan which is also zero down.

Related: Michigan Down Payment Assistance Program

3. How do I get pre-approved for a mortgage?

Call up Riverbank Finance today if you are looking to get pre-approved. Our loan officers will be able to tell you over the phone whether or not you are pre-approved. You will be asked about your income, available assets, current debts, employment, details about the property, and credit. It is beneficial to get pre-approved because it not only lets the seller know that you have a lender ready to work with you, but it also tells the seller that you are a serious bidder.

4. What documents are required for a home loan?

Typically, you be required to send in the following documents:

  • Driver’s License
  • Social Security Card
  • 1 Month Worth of Paystubs
  • 2 Years of Most Recent W2s
  • 2 Years of Most Recent Tax Returns (if self-employed or commission)
  • 2 Months Bank Statements
  • Most Recent Quarterly Retirement Statement
  • Home Owner Insurance Quote
  • Purchase Agreement

Once your file is in processing you will be asked for additional documents specific to your situation.

5. Should I buy mortgage discount points?

That depends on your situation. One point usually costs about 1 percent of the mortgage and usually reduces your interest rate by 0.25 percent. Sometimes it does not make financial sense to buy points. Especially if you do not plan to live in the house for that long of a time. It can take a long time to make up the expenses that it cost to buy the points. If that is the case, then buying points may not be so beneficial for you. On the other hand, if you plan on keeping the property for a long time then buying the points can potentially save you thousand of dollars in interest.

6. How much do I have to pay for closing costs?

Closing costs will vary for each loan. They could range anywhere from 0 to 5 percent but usually average to about 2 to 5 percent of the purchase price. Closing costs typically include fees from title insurance, property taxes, mortgage application fees, and homeowners insurance. If you ask for seller’s paid concessions that can cut down on the amount of closing costs that you need to pay.

7. How long does it usually take to close?

At Riverbank Finance, we aim to close our loans within 20 to 30 days. The industry average time to close a mortgage is currently around 43 days according to the Ellie Mae mortgage survey. The amount of time can vary though depending on your situation. It is important to keep in touch with your loan officer and processor though the whole course of the loan. It is also extremely important to get the additional documents that are asked for in order to keeping the loan moving.

8. What does the process look like?

First, your loan officer will take you through the pre-approval process listed above. Your loan officer will then help you complete a loan application. After you are pre-approved or if you are pre-qualified you will be asked to send in your official documents. Your loan officer will check these over and make sure that they match up to the information given early.

After you have sent in a purchase agreement your loan will go into processing. You and your loan processor work together to send in the additional documents that the underwriter asks for in your conditional approval. Once all of these conditions are met your loan can be scheduled to close.

If you have any additional questions, please call Riverbank Finance at 800-555-2098 and ask to speak with one of our loan officers. Or sign up on our website. Remember the homebuying process does not have to be hard if you do your research up front!

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Loans for Veterans

Three years after the Civil War ended, Memorial Day was established to honor our veterans on the last Monday of May every year. But that’s not the only thing the US Government has done for veterans. Started in 1944, the VA Loan program makes the burden of getting a mortgage easier for qualifying veterans and surviving spouses.

No Down Payment Mortgage

One hurdle home buyers often face in getting approved for a mortgage is the seemingly insurmountable down payment. However, if you’ve served our country in the armed services, you don’t need a down payment! Traditional mortgages can require up to 20% for a down payment. That is a potentially huge weight off a buyer’s shoulders!

It Gets Better for Veterans

VA Loans have other added advantages over conventional financing. The loans are backed by the US government. That benefit is especially helpful for veterans with bad credit. A buyer can have a credit score as low as 580 and still get approved.

Another benefit of the loan being government-backed is that it doesn’t require private mortgage insurance (unlike FHA loans). Any other kind of loan, with less than a 20% down payment, must have Private Mortgage Insurance. PMI protects the lender in case of a default, but in a VA Loan, the government acts as the insurance.

Use our VA Mortgage Calculator to estimate monthly payments.

Sign Up, Soldier!

So how do you get a VA mortgage? The first step is to get a Certificate of Eligibility from Veterans Affairs (We can do this for you with a quick phone call), to show that you are eligible for the program. Once the certification is received by a loan officer and processed (most are instant however manual COE’s can take 5-10 business days), the loan goes for pre-approval. You could qualify for up to a $453,100 loan. Your dream home might be more within reach than you think.

Riverbank Finance offers both 15 and 30-year VA Loans. We can review the benefits of both VA loan terms to find the right fit for your family. Apply for a VA Loan online or in person at our office. Our offices are also handicap accessible making it easy for disabled vets.

VA Refinance Loans

If you already own a home and qualify for a VA Loan, you also can benefit from refinancing through VA Loans. Like other VA Loans, this program was set up with easier qualifications and benefits than a traditional loan. For refinancing, this means that you can cash out up to 100% of the value of your home. So if you haven’t taken advantage of VA Loans in the past and have a remodeling project you’ve been putting off, now is the time. These are benefits you earned for serving our country. Use them!

We, here at Riverbank, are thankful for our armed service members. We feel honored every time a veteran seeks a loan through our services and strive to make the process as easy as possible.

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Qualifying for a Mortgage with Student Loan Debt

qualifying for a mortgage with student loansIf you are in the market for buying a house it is important to understand the implications of qualifying for a mortgage with student loans. Each year, at least 60% of college attendees take out some form of student loans to help with the ever growing costs of higher education.  While this can be an invaluable investment into one’s future, these loans can pose a challenge when it comes to buying a home.  Recently, new guideline changes have gone into effect that can substantially impact how someone qualifies for a mortgage.

FHA home loans are a great choice for first time home buyers with flexible work history and credit requirements!

The main way student loans impact an individual’s qualification is through their impact on an applicant’s Debt-to-Income Ratio (DTI).  This ratio gives a lender an idea of an applicant’s ability to reliably make monthly payments.  Simply put, this figure is calculated by dividing all monthly debt obligations (ex. Car Loans, Credit Cards, Mortgages, Student Loans, etc.) by gross monthly income.

Each mortgage program has different guidelines that are key to qualifying for a home loan with open student loan debts.  Calculating the monthly costs for student loans is especially tricky if the loans are deferred, in forbearance or not yet in repayment.

Regardless of program type, one of the most important actions a prospective home buyer much can take is to gather the payment documentation for the student loans.  This will allow your mortgage professional to ensure the most accurate qualification and best deal possible. The buyer’s credit report may not always accurately reflect the buyer’s minimum student loan payments which may affect underwriting approval.

Below are a few indicators of how student loan payments will affect a buyer’s debt to income ratio when qualifying for a home loan:

  • Conventional Mortgage with Student Loans
    • Regardless of deferment or forbearance, a payment must be counted against DTI
    • This payment will be calculated by either 1% of the remaining balance or the actual monthly payment, whichever is higher.
    • If a student loan payment is reporting on a credit report some conventional programs may allow this payment to be used even if it is under 1%.
    • Example: $24,000 in total student loans would add a minimum of $240 per month for qualifying purposes.
  • FHA Mortgage with Student Loans
    • Regardless of deferment or forbearance, a payment must be counted against DTI
    • The greater of the actual monthly payment from the credit report or 1% of the remaining balance will be used to calculate a minimum qualifying payment.
    • Income based repayment plans are no longer accepted if they are not fully amortizing.
    • Example: $24,000 in total student loans would add $240 per month for qualifying purposes if no payment is reporting on credit otherwise the underwriter will accept documentation showing the minimum student loan payments.
  • USDA Mortgage with Student Loans
    • Regardless of deferment or forbearance, a payment must be counted against DTI
    • This payment will be calculated by either 1% of the remaining balance or the actual fixed monthly payment, whichever is higher.
    • Income Based Repayment plans are not acceptable if they are less than 1% of the balance.
    • Example: $24,000 in total student loan payment would add a minimum of $240 per month for qualifying purposes.
  • VA Mortgage with Student Loans
    • The actual payment listed on the credit report or account statement will be counted against a borrower’s DTI.
    • Student loan debt may be excluded from DTI if the payment is not scheduled to begin for 12 months after the closing date (Documentation is crucial).

Get Pre-Approved to buy a home when you have student loans

We work with several first time home buyers and even repeat buyers have student loan debt.  It is crucial that you work with an experienced loan officer that knows the guidelines to assist you in qualifying for a mortgage when you have student loans.  With each mortgage program having different loan requirements it is important to understand how your debt to income is affected with each home loan option.

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Tips to Avoid Closing Delays when Buying a Home

Things to avoid when buying a home in Michigan.Mortgage Closings are stressful. Let’s not add to it!

Congratulations! You have found the home of your dreams! You have all of your documentations in order! You are ready to move in! All you have to do is close on your mortgage! But wait, did something go wrong that could potentially prolong your loan closing? Was it something you did? Was it something you could have prevented?

When something goes wrong and there is a delay in the close date it can be very disappointing and frustrating.  Unfortunately, we see this happen all too often when home buyers create delays on their own loans. Here are some tips that should be followed during the process to make sure you cause no closing delays.

RELATED: First Time Home Buyer in Michigan

Be accessible and keep in touch with your loan officer

Stay in touch! Do not go out of town and do not change your phone number.  Make sure you are available to all parties involved in your closing. When underwriters or title companies need documents and information they need them now!  So stay connected, check your email and listen to your voice messages.  If information is not given in a timely fashion your closing date won’t be either.

Look for incorrect information on your mortgage documents

Incorrect, misspelled or missing information is a huge problem during the closing process that could delay it.  It is important to check over all documents and information prior to closing.  Correct all information as soon as you notice it is not correct.  Finding out information is not as it should be at closing could delay the process for days.

So, stay connected with your resources and sort out all of the little things as they come – don’t wait until the end!

Things to double-check on your mortgage paperwork include: loan amounts, down payment amounts, interest rates, name spelling, social security numbers, previous addresses, employer information etc.

Do not change jobs, become “self employed” or quit your job

Doing this is a sure way to prolong the process of purchasing a home.  Underwriters require you to provide a month’s worth of paystubs during the process of buying a house.  Therefore, if you change your employment and/or income you will need to provide another month’s worth of paystubs which could lead closing to be pushed back more than six weeks.

If you become self employed, commission based or a contract employee that gets paid by 1099, you may need a 2 year history to prove your income. Changing to self employment will surely delay your loan closing.

Stay with your current employment and income throughout the entire process of purchasing your home.

Managing your Bank Accounts wisely

Do not do anything that could dramatically change what you have in your savings and checking accounts including: transferring large amounts of making large deposits into your bank accounts or making large purchases.

Just because you have to money in your account doesn’t mean you can afford to spend it. If your underwriting approval is based on your current statement balance, spending money by making large purchases could delay your loan closing.

How much you have saved is a big deal to lenders.  It tells them that you have enough for a down payment and that you will be able to pay your monthly mortgage payments.  Changing the assets in your savings and checking accounts could change their minds about you and your financial situation.

When large amounts of money are transferred or deposited a red flag goes up that is often seen by lenders.  This leads them to wonder if you have recently taken out an additional loan (or cosigned a loan) that they are unaware of – is your debt larger than what they thought?

If you are getting a gift for your down payment or closing costs, be sure to speak with your mortgage loan officer about the process that needs to be followed to use these funds. You will need to fully document the source of the funds and provide a letter stating that no repayment is required.

Try your hardest to keep your bank account relatively the same throughout the process and speak with your loan officer before you make adjustments.

Do not jeopardize your credit score

Keep your credit score the same as it was when you were approved for the mortgage.  If it changes it could change your approval status and your eligibility for the mortgage.

Do not take out more debt during this process!

So, try your hardest to keep your credit card balance(s) at a minimum – don’t max them out.  Don’t take out addition loans or cosign loans.  Don’t take out new credit cards and do not close old ones.  And of course, pay your bills on time.

Most Importantly – DO NOT GIVE UP!

There are many hills (some feel like mountains) to climb and many bumps avoid during the closing process.  It is stressful and sometimes frightening but don’t get scared!  Keep chugging along!  If you are unsure of what is going on ASK! Your loan officer will gladly explain exactly what you need to do to have a smooth closing.

There is light at the end of the tunnel – becoming a homeowner is part of the american dream!

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