Your Work History and a Mortgage Loan

If you are applying for a mortgage, you most likely have a job.  Which means you probably have a work history.   Work history is a very important facet of lending money, they will want a 2 year history of employment that displays any gaps or inconsistencies in your job performance.

People that have been on their jobs for many years and make a consistent salary are the easiest, but what is the effect of someone who has several jobs over the last couple years?

Lenders will verify your employment with each job that you have had in the last two years, they are concerned about the following

  1. Did you work for the company?
  2. How long did you work for the company?
  3. How much did you make at this company?
  4. What was your position at your company?
  5. Why did you leave the company?
  6. Was there overtime pay?
  7. Are / Were you paid commission, salary , hourly. etc.

With the above information they can piece together a picture of your job history, and match it to the application of information you provided.  They want to know what type of positions you’ve had in the last several years, and if they all correlate to one another, or did you switch industries multiple times?

If your transitions between companies have been beneficial (I.E more pay, better benefits , closer to home , etc) they make sense and cause no issues.

But what about when the verification forms show the opposite?

If you have a habit of switching jobs for no real benefit, it could potentially show a lack of responsibility, and that makes an underwriter question how you might pay back your debts.

For example, if you Worked at Target for 6 months, then transitioned to a construction company; a totally different industry, for the same pay; it would raise questions as to what motivated the move.

It’s not necessary to be on a job for many years to qualify, but it is necessary to be conscious of the past several years job history and how you would reasonably explain that to someone lending you money.

The only way to find out is to talk to an experienced loan officer that could assist you in piecing your job history together in a way that makes sense to the lenders.

To find out, please click here:

http://executivemortgagellck.clixonit.com/

Justin Scott

NMLS 878581

(920) 530-4484

Why is Communication so Important in a Mortgage Loan?

One of the most common reasons a mortgage loan goes awry is a simple lack of communication.

Everything in the financial world is time sensitive and a mortgage is no different.   Once you have an accepted offer on a home your timeline starts.   You are bound to certain time lines within that contract and must adhere to them.   This is why it’s important to have a loan officer ,real estate agent and client that are all on the same page.

You are going to want to furnish a letter of Pre-Approval upon submitting an offer, so immediately it’s important to have a loan officer that can provide this to you and your real estate agent in a timely fashion, a lack of communication can delay the letter and make your offer look unofficial; and the seller could potentially pass on your offer.

After the offer is accepted you are required to submit your earnest money check, this typically has a 3 day window and it’s best to keep an open line of communication with your real estate agent to ensure you provide this within contract guidelines.

The next contingency will be the home inspection, you have between 5-15 days to provide a home inspection and request any repairs you wish.  Keeping an open line of communication with your real estate agent and lender at this time is very important as it can affect the numbers in the loan.

While you’ve been working on the previous two contingencies for the sales contract, your lender will be requesting you to sign documents that outline the prospective loan you are applying for.  They will need income documentation and explanations on certain things, to ensure the loan closes by the contract date it is important to provide this documentation as quickly as possible.

 

So now you have the home inspection, earnest money and documents signed, you are in underwriting.  This is the hurry up and wait part of any mortgage loan.  The underwriter is reviewing your file and conditioning for more questions.  This is usually the part of the loan that most buyers get concerned about, because they’ve hurried for the past week getting the aforementioned items completed, now there is nothing to do but wait.

 

During this period the lender and realtor have a close hand-in-hand relationship that works through things like ordering the appraisal and reviewing the file, when they need something they will happily reach out to request it.

This is the where a good lender and real estate agent really shine, during the time you are waiting for approval, you will most likely be nervous, a good lender will have no problem taking your calls to put you at ease.  Remember, no news is good news in a mortgage.

At this time in the loan you are probably about 2-3 weeks in, and a little over half way to closing day.  When you have an approval on your loan and your lender requires more documentation, it’s imperative to provide them quickly.  Underwriting can take anywhere from 3 days to a week on certain files, and if you don’t get the information in quickly it can hold things up.

So when your agent calls, or your lender calls and needs something from you, take the call and provide it as quickly as possible to ensure a timely transaction, in return your lender and agent should be providing the same service to you as well.  Making sure you are comfortable will all aspects of the process.

Professionals that have been in the business understand the emotions that you feel when buying a home, it’s a stressful and exciting time, a good lender and agent will console and understand this.

If you want to find a good lender that works with you

http://executivemortgagellck.clixonit.com/    <— Click here

 


Justin Scott

NMLS 878581

(920) 530 4484

Be Aware of Your Deposits

Applying and closing on a mortgage can be a simple process if you are prepared for it, if you are not prepared it can be a significant amount of paperwork and questions.

One way to cut down on these seemingly endless questions about your personal finances is to be aware of the deposits entering your bank accounts.

An underwriter will generally question deposits that meet or exceed 50% of your gross monthly income, or if there is an unusual deposit that doesn’t “fit” into your normal pay scale.  To avoid this you can follow these few rules:

Season your money:

What does “seasoned money” mean?  It is a term used for money that has been in your bank account for 60 days , or two whole bank statements.   If you have deposited a large amount of cash into your savings account, it will show up on your next bank statement.

But if you have two full bank statements that do not show this cash deposit, it’s considered “seasoned money” and the underwriter will not ask about it.  So if you are planning on buying a home this upcoming year and you have a stash of cash, make sure you put it in sooner than later so you don’t get questioned about it.  Because Cash is untraceable, therefore it is unusable.

 

Be prepared to source your deposits:

Quite a few people get gifts from relatives, or withdraw from their 401(K) for the downpayment.  This is completely acceptable, but again if the underwriter witnesses a large deposit, they will require you to source it.

Gifts can be sourced with transaction histories, gift letters and bank statements.   401(K) deposits will be sourced with quarterly statements, transaction histories and a withdrawal request from your financing company.  So be prepared if you are considering using any of these sources, again it’s totally acceptable, but will require some additional documentation.

 

Don’t sell assets like cars and motorcycles to get cash

First off, this is an acceptable form of money, but it becomes incredibly tedious to properly source it.

If you sell a car to get the money you need for a down payment, the underwriter will require numerous things to verify the money came from said car sale.   Typically it will be things like this:

  1. Picture of the automobile
  2. Bill of Sale
  3. Appraisal / Bluebook value of automobile to justify value
  4. Letter of Explanation about the sale and how you came across the money
  5. Copy of the check used to buy the automobile
  6. Title

As you can see, it can get pretty hairy if you are selling unsecured assets.

 

You can take out a collateral loan:

Another common way some people have received a down payment is taking out a collateral loan on a secured asset they own.  Something like a car / truck, Home equity line of credit, a boat, or other asset.

They will need to source this as well with all the loan documentation and a transaction history showing the money entering your account.  They will be concerned about the new payment required to satisfy the new loan, and it will be counted against your debt to income ratio.

 

There are loans that require NO down payment:

As mentioned in previous blogs, there are loans that require no down payment, but they are subject to different guidelines.  For example if you are to do a WHEDA loan, you are held to stricter income standards, you cannot make too much money, or too little.

If you are to pursue a VA loan, you will have to be a veteran.

If you want to pursue a USDA loan, you will be purchasing a house in a more rural community, and you are subject to income guidelines.

 

The best way to identify your best course of action is to meet with a qualified loan officer prior to buying a home, explain your situation and come up with a plan.  If you execute the plan well, you can ensure a smooth, easy close.   It’s always recommended you take your loan officers advice when they suggest how to go about things.  A good loan officer will go over multiple options that can best be suited to you and your family.

 

If you want to figure out a plan for yourself, and buy a home in the future. 

http://executivemortgagellck.clixonit.com/     <– Click here

 

Justin Scott

NMLS878581

(920) 530-4484

Executive Mortgage LLC

NMLS271650

909 E. Walnut Street, Green Bay WI 54301

Make Sure You Are Getting The Best Deal On Your Mortgage

Buying a home is most likely the single largest investment most of us will make in our lifetime.  There probably will not be another time in your life where you spend this kind of money in a single transaction.

So wouldn’t you want to know you are getting the best deal on your mortgage?

I’ve seen many potential clients follow the same trend, they do most of their financial transactions through their bank or credit union, so why not their mortgage too?

Because there are alternative options to your traditional bank or credit union, and they come with some serious benefits.

I’ve explained before how a bank vs. a broker works, this article isn’t about the difference, but rather the fact you should shop the biggest investment in your life.  If you are able to save $1,000 on costs and .25% on the rate, you would be savings thousands over your entire investment.  So wouldn’t it pay to take 20 minutes and call someone else?

As a broker we are able to work around most other quotes, and “trim the fat” that some other lenders might be charging because the fact is, most people just do not shop around enough for a better mortgage.

Don’t fall into this potentially expensive pitfall.  Find a lender, figure out the quote and compare it to someone else.  It might be one of the best decisions you make in the next 30 years.

Let’s explain how a simple quarter percent can affect a $100,000 dollar loan:

At 4.25% (30 year fixed conventional) your principle and interest payment on $100,000 is $491.94.

If you were able to get a 2nd quote and get 4%, the payment would be $477.42 for the same loan.

That is $14.52 a month you would be saving.  It may not seem like a lot right away, but realize that a mortgage loan is a marathon, not a sprint.

So over a 30 year period (assuming you stay in the home that long, most likely you won’t) that $14.52 will accumulate to be $5,227.20.  I calculated this by taking $14.52 and multiplying it by 360 (there are 360 payments in a 30 year mortgage)

$5,227.20 is a considerable amount of money.  You can do a lot of things with $5,000.

So it pays to shop, you would shop Amazon, or Ebay for an item you wanted, why wouldn’t you shop for your mortgage.

Not all lenders are the same

 

To find out how much of a difference our rates can make for you,

Click here:

http://executivemortgagellckw.clixonit.com/

Why you should consider a WHEDA loan

A program that has become increasingly popular in 2017 has been the WHEDA loan.

This loan has distinct advantages over its conventional counterpart, and can provide a cheaper payment than FHA.  One of the most obvious benefits is that it only requires a 3% down payment and you have the ability to finance it over a 10 year period, at the same rate as the first Mortgage.

Let’s say you are buying $100,000 house, you were going to be required to put down a 3% down payment. So you will have one mortgage at $97,000, and you will have a second mortgage at $3000. You will pay off the $97,000 mortgage over a period of 30 years at a fixed rate, and you will take the $3000 on a 10 year note at the same rate as the first fixed.

That is a huge advantage for first time home buyer‘s that do not necessarily have much money to put down for their first house.

There are other benefits as well, what comes to mind is WHEDA does not have the same rate adjustments as a traditional conventional mortgage. This means your credit score does not have such a severe impact on the you will get.  Without the price adjustments powers are able to get a lower rate that they were conventional, ultimately resulting in a lower payment and less interest paid.

WHEDA also has an option for no mortgage insurance with 3% down, this is available if you finance a down payment as well.   Conventional mortgage will give you pricing adjustments, sometimes pretty severe, in exchange for paying your own mortgage insurance.   WHEDA does not carry these mortgage insurance pricing adjustment, again resulting in a lower payment with no mortgage insurance.

There are some disadvantages to having a WHEDA loan though.

You are only entitled to own one property, a WHEDA homeowner cannot own a second home or investment property while carrying one of these loans.  So if you ever decide you want to buy a hunting cabin, or a vacation home, you will be required to refinance out of your WHEDA loan.

There are also income limits with these loans,  and they are gauged by counties in Wisconsin.  An example of this would be Brown county Wisconsin, First time home buyer, 1 to 2 people in the household cannot exceed $69,900 a year, If there are three or more people residing in the home, including children, the threshold is $80,385.

WHEDA  Will take all income streams within the household into consideration, this includes Child Support, alimony, overtime, Social Security, or any self-employment income from side businesses.

If your income is slightly higher than the previous threshold, there is an option that has a higher income limit. WHEDA non- first time homebuyer has a threshold of $80,385 for 1 to 2 people, and $94,365 for three or more people.

These loans are great for first time home buyer‘s or maybe a tarnished credit history, because they do not expect to have the same pricing adjustments for credit scores.

Executive Mortgage has been a top WHEDA lender Wisconsin for the last 10 years, You have more interest in seeing if you qualify for this loan, please click here –> http://executivemortgagellck.clixonit.com/

 

Justin Scott

NMLS87581

(920) 530 4484

What Does it Take to Buy a 2nd Home?

So you have come to a point in your life where you are considering a 2nd home?  Maybe it’s on the water, maybe it’s in another part of the state and you acquire it for hunting and vacations.

Either way, 2nd home purchases are similar to primary home purchases in many ways; but they are also slightly different.

 

The first difference you will notice when buying a 2nd home is the down payment requirement.  A traditional, primary purchase requires anywhere from 3% – 5% down.  A 2nd home will require 10% down.

Also,  a 2nd home purchase has to be a conventional loan.  You cannot own a vacation property with an FHA/ USDA / WHEDA  loan. (You can purchase a 2nd home with a VA loan if you have enough entitlement left)

The reason is you are only allowed to have 1 USDA / FHA loan at a time, WHEDA will not allow you to have any other properties at all.  So if you are intending on purchasing a hunting cabin, or a vacation home, it will have to be a conventional with 10% down.

You also might be subject to reserve requirements when purchasing a 2nd home.  Reserves are the assets you contain in a liquid bank account, a 401(K) / IRA / or other retirement account, stocks or bonds.  Depending on the situation, you may be required to hold 3-6 months reserves (full mortgage payments) to assure the lender you have the assets needed to keep your mortgages afloat if something catastrophic happened.

There are no extraordinary rate adjustments when buying a true 2nd home, but to consider it a 2nd home there are distance and location specifications needed.

Typically the 2nd property has to be 50+ miles away from the first, if you are buying a 2nd property that is too close to your primary, the lender may assume it’ an investment and different pricing applies.

The exception to this rule is if the 2nd property is in an area that typically is accustomed to vacation homes.  Places on the water, or in tourist locations.  Sometimes this can be a loophole and circumvent the 50 mile rule.

If you want to find out more about the requirements for purchasing a 2nd home, or a vacation property.  Please click the link below!

 

http://executivemortgagellck.clixonit.com/

Click above!

Using Equity to Consolidate Your Debt

One of the most powerful advantages of owning a home is the equity.

Let’s preface by explaining that equity is the amount of your home you own in comparison to it’s value.   If your house is worth $150,000 and you ow $100,000, you have $50,000 in equity.

You have the ability to combine other debts into this equity in your house.  Considering that a mortgage loan will be one of the lowest interest rates you have compared to a car or credit card, it could be a way to save a serious amount of money on the aforementioned items.

Something to consider is the amount of interest you will most likely spend on the car, credit cards, home equity line of credit, student loans, etc.  Then compare it to the amount of money you will spend on the mortgage.  Because most likely if you combine all these items together into a 30 year fixed term you will be combining the high interest into the low interest and reducing payments on a monthly basis.

 

Let’s provide an example

If your mortgage payment is $491 a month now and you owe $100,00,  and you spend $200.00 on your car and you owe $10,000, you are spending  $150.00 on your credit card and owe $5,000, You’re also spending  $150.00 on your home equity line of credit which you owe $15,000., you are paying $1,141 a month on these debts and owe a total of $130,000

Now if you combine the car, the credit cards and equity line of credit into a new mortgage balance of $130,000.  Your monthly principle and interest would be $639.52 a month.  That is $501.48 you are saving a month on these bills, and you’ve consolidated them into 1 easy payment.

The flipside of the coin is the long term interest.  You will most likely pay the most interest on your mortgage because it’s the longest term (30 years)

 

This refinance is called a “cash out” refinance, because your are “cashing out” on the equity on your house.  It can be a powerful tool to free up some money if you need to do so.

 

Want to see if you qualify for a cash out refinance?  Click on the link below.

http://executivemortgagellck.clixonit.com/

I wanted to add an additional tool as well:

You can find out how much your home is worth by clicking here:

http://executivemortgagellcx.clixonit.com/

 

Thank you!

 

Justin Scott

NMLS878581

(920) 530 4484

Executive Mortgage LLC

NMLS 271650

909 E. Walnut Street,

Green Bay WI, 54301

5 Things that Can Kill Your Mortgage Loan

The mortgage process is a tricky endeavor, aside from digging into the last several years of your life and financials, they will continue to monitor your financial status up until close.

Many people don’t realize this, and a good loan officer will let their clients know how important it is to follow the following 5 rules:

 

Rule # 1 :  Do not add additional debt or charge excessive amounts on your existing lines of credit!

This is often the most common error that clients come across.  Buying a home is exciting, you need new curtains, paint, furniture and who knows what else.  But how are you going to pay for these things?

This is where most people go wrong, they go to a retail store and immediately open up a credit card to purchase the aforementioned items.   But now you have an additional debt, and the lender is monitoring this, they know know you’ve opened up a new line of credit and they will require you to prove how much the monthly payment is.  Now typically it’s not a big payment and most people can manage the additional $25 in their debt to income ratio.  But the main problem is that these card statement do not come for a month, and if we need to prove the payment how are we going to do that?  You can usually go online and start an account, but it might be up to date and show your true balance.  These are the things that cause problems and delay a closing.

How to Fix this problem:

Pay cash if you can, don’t open up a store card, put the items on lay away or just wait.  Believe me, it’s worth waiting if it’s going to delay your closing.

 

Rule # 2: Do not Change Jobs!

This one is another primary cause of delayed closings.  When you are applying for a mortgage, they are loaning you a significant amount of money, they want to ensure that you can pay it back based on your current earnings and debts.  So if you decided to take a new job that pays .25 cents more an hour, you should still qualify but they have to prove that you are now working at this new job.

So a first paycheck will be needed, a verification of employment will be required from the new employer.   First paychecks sometimes do not come for 3-4 weeks after you start working.  So you could see how this might delay your closing.

How to fix this problem:

Do not change jobs in the middle of the loan process, if you have an opportunity to take a new job at a higher pay rate, ask them if they can wait until you close on your house. Most employers would understand.

 

Rule # 3 : Provide documentation in full and quickly as possible

The lender will need a variety of documents from you, taxes, W2’s, 1099’s , pay stubs, etc.  It is important that you get these to your loan officer as quickly as possible to ensure they have sufficient time to process everything and meet your closing date.  There will be additional items the lender needs that “pop up” throughout the loan process, so it’s important to keep a steady line of communication with your loan officer and get them the items quickly.

 

Rule # 4: Do not charge excessive balances on your existing lines of credit!

This goes back to rule # 1, do not charge expensive items on your existing credit cards or lines of credit.  If you purchase too much at 1 time it will raise your minimum payment and the lender will be notified that a new payment is in effect.  We will now need to prove this new payment to ensure your debt to income ratio still works.

 

Rule # 5: Make all your existing payments on time

This happens more than you think.  In the midst and frenzy of applying for a mortgage,  moving, arranging help, communicating with your loan officer, you suddenly forget to pay that monthly credit card bill, or your car payment is a day late.

It happens to everyone, but in the middle of a mortgage loan it could be a death sentence.  It is recommended that you put all your bills on auto pay, even if it’s just for a short period of time during this process.  Most likely you will be paying your mortgage this way as well.

The lender does a “soft pull” on your credit within 10 days of closing, this is to see if there has been any additional debt opened up or significant debt added.  It also shows how your existing lines of credit are being handled.  If you missed a payment it will show at this time, and your credit score will probably have dropped.  This could be the difference between qualifying and not.

 

How to fix this problem:

As mentioned, try and put your bills on auto-pay, even if it’s for a short time.  You can ensure you won’t be missing any payments during this process; and you might come to find you enjoy the ease of not worrying about it.

 

If you think you might be in a position to buy a home, or if you have questions about anything mentioned in this article (or any of these articles) Find out if you qualify, or what current rates are by clicking the link below:

 

http://executivemortgagellck.clixonit.com/  

Click the link above !

 

 

Down Payment Options for the First Time Home Buyer, Grants, New Cap, Neighborworks.

Down Payment Options for First Time Home buyers.

 

The majority of first time buyers I encounter have very similar hesitations, and that is coming up with enough money to purchase their first home.

With the student loan crisis bearing down and burdening millions of millennials with extraordinary debt, qualifying for a home seems like a far fetched idea, much less accumulating the down payment to buy one.

With Fannie Mae’s newest development; increasing debt to income ratios and student loan acceptance, that eliminates two of the major obstacles that Millennials are facing.  Now we have to figure out the down payment problem.

But we have already!

There are several loans out there that are perfect for the first time buyer, that either eliminate the down payment completely, subsidize it with grants, or allow you to finance it in a 2nd mortgage to alleviate the burden of spending money you just don’t have.

This comes as a relief for many, because interest rates are still incredibly low and there are incentives for buying right now.  No one can predict how long this market will continue, but we are seeing a shift.  Because of this shift I believe we are seeing regulatory factors lighten in an effort to maintain a consistent increase in the economic burst.

The down payment assistance / subsidize I mentioned earlier are becoming increasingly popular.  There are local, government funded programs like Newcap and Neighborworks; these providers are able to issue grants.  Some of these grants are forgivable, and some are not.   Make sure you read the fine print, and I’m sure whoever assists you will be more than happy to explain.

Ask your lender if they work with these programs, and if you are eligible.  They are sensitive to income limits and household size.  This information is just another reason to work with a qualified loan officer who can explain the utilization of these grants to you.

 

Want to see if you are eligible for grants or down payment assistance?

http://executivemortgagellck.clixonit.com/

Click the link above!

Are you Interested in Buying Investment Properties?

Buying Investment Properties:  The basics

 

With the advent of real estate investing shows like “House Flippers” and “Design on a Dime”, we have seen more interest in the purchase of investment properties than ever before.  This increased demand is a good thing because investment properties are typically a sluggish market compared to that of occupied residencies.

But the question persists, what does it take to actually buy an investment?

First you have to ask yourself what type of investment property are you looking for?  A single family?  A duplex?  A Tri-Plex or a complex?  Once you’ve decided this, you have to know if you will be occupying part of the building or totally renting it out.  Residential mortgages will only extend financing fro 1-4 unit buildings, anything above that will be out of the realm of wholesale residential lending.

These are key factors because they affect the down payment, loan type, interest rate and reserve requirements needed to buy.

Let’s start with the basics:

Owner Occupied Duplex:

If you intend on buying a duplex, living on one side and renting the other to subsidize your mortgage, than this is typically the cheapest and easiest way.  You can do it either FHA or conventionally, depending on your down payment.

FHA owner occupied Duplex will require 3.5% down payment, the same as buying a single family home.   But you HAVE to occupy the property and some lenders will require 3-6 months reserves.  There really is no difference in the interest rate because it’s considered an owner occupied residence.

Conventionally you can buy the same property, but it will require a 15% down payment and you will incur a higher rate.  Investment properties usually carry a higher rate because they are a higher risk to the lender.  If the worst case scenario happened, people are more likely to walk away from their investment properties before their primary residencies.

Non-Owner Occupied Single Family

Purchasing a non-owner occupied single family home will run you a 20% down payment and between 3-6 months reserves for all residencies you own.  Meaning if you own a home, buy another home to rent, you are required to carry 6 months payments in your 401k / Savings / Pension , to ensure that you can make the mortgage payment for 6 months in the event of job loss or financial woe.

Non-Owner Occupied Duplex

You can only purchase a non owner occupied property with a conventional loan.  FHA / VA loans are not designed for this, and if you are caught doing so the penalties could be hefty.

That being said if you are to buy a Duplex you will require a 25% downpayment.  This is because a duplex is a higher risk, because of this risk you will incur a higher interest rate as well.  You will be held to the standard 3-6 months reserves for all financed properties as well.

 

Tri Plex:

Purchasing a Tri Plex (3 unit) comes with all the same regulation as a Duplex.  25% downpayment, same reserve requirements.

 

Complexes: 

Buying an apartment complex with 5 or more units puts your lending needs into a different category.  Typically you will be dealing with a Bank or a local credit union that might advocate a portfolio loan, which may be a 5 year adjustable rate, or a balloon loan.

 

Want to find out if you qualify as an investor?

Click here–> http://executivemortgagellck.clixonit.com/

Get Pre-approved for your next mortgage loan in the Green Bay, Wisconsin Area