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Bank Statements: The Lender’s Window to Your Wallet

Bank Statements: The Lender’s Window to Your Wallet 1024 536 John Robinson

Bank Statements: The Lender’s Window to Your Wallet

Your bank statements, like your credit report, are a window to your finances and your life. They are so much more than showing a lender your assets.

Lenders are looking for things like checks that have been returned for insufficient funds. If they discover these, they will want to get to the bottom of what happened. Was it caused by a bad check written to you? Was it mismanagement of your own finances? How did this happen? How often does this happen? What will keep it from happening in the future, if they loan you money for your new home?

Other red flags lenders watch for include large, non-payroll deposits that seem to have no source. Was it the proceeds from the dining room set at the garage sale last month? Was it a reimbursement check for the office supplies you recently purchased? You may be asked to write a letter of explanation for items like these during the mortgage process.

If the deposit is a gift from someone for your home purchase, and that person is an eligible donor, the lender may ask for a signed gift letter. This must state that the deposit is for the purchase of the home and that there is no expectation of repayment on your part. The lender may also ask for proof from the donor of his or her ability to give you this money. The donor must verify that it came from a legitimate source, such as a bank account, where it has been for several months.

Why does the lender need such detail? It’s because there is a good chance that your loan will be sold to investors, perhaps multiple times. Investors will take a peek through the lender’s financial window, and your lender wants them to like what they see.

Contact MiLEND today and see what all their loyal, satisfied customers have been saying all along. When you combine their level of world class customer service with the benefit of saving money, it becomes clear that MiLEND is the premier lender to use for all your loan and mortgage needs!

Prequalification and Preapproval Are 2 Different Documents

Prequalification and Preapproval Are 2 Different Documents 977 404 John Robinson

Prequalification and Preapproval Are 2 Different Documents

To the average consumer, there’s little or no difference between “prequalification” and “preapproval” letters, but to lenders – and real estate agents – there’s a world of difference.

A prequalification letter is easier for a buyer to obtain. When a prospective buyer meets a lender to find out how     much house he or she can afford, the buyer may provide certain information such as employment, income and assets without providing documented proof. The lender assumes the information provided is correct and complete, and will base their decision on the information provided. Pre-qualified borrowers are not underwritten by the lender’s underwriter.

The preapproval letter is a much more detailed process in which the lender verifies, with documented proof, the information provided by the buyer such as employment, income and assets. Tax returns will be pulled from the IRS, and the buyer’s assets will be verified.  The lender’s underwriter will review all this information to determine the amount of loan the buyer qualifies for.  The preapproved buyer will have their file completely processed and underwritten by the lender.

The next step in the process is for the lender to issue a “commitment letter.” This can only happen once the buyer has found a property, and the lender has seen the appraisal, the title, and the flood cert, among other documents. The underwriter must issue a clear-to-close approval where all conditions have been met.  This letter proves the lender is sufficiently confident with all the documentation to approve the mortgage.

It makes sense as a buyer to obtain a preapproval letter to provide to the sellers when the sellers are reviewing multiple offers.   The seller will give those offers with a preapproval letter more consideration when making a decision.

Contact MiLEND today and see what all their loyal, satisfied customers have been saying all along. When you combine their level of world class customer service with the benefit of saving money, it becomes clear that MiLEND is the premier lender to use for all your loan and mortgage needs!

Time For Summer Savings with Debt Consolidation

Time For Summer Savings with Debt Consolidation 1024 536 John Robinson

Time For Summer Savings with Debt Consolidation

“It’s summertime and the livin’ is easy…”

Or so the song goes… One thing that is true, however, is the fact that it’s summertime and that means it’s also the perfect time to reassess your financial situation before the fall/back-to-school routine kicks back in. Perhaps you extended yourself a little bit in order to make summer vacation a reality. Perhaps it’s just time to get your financial house in order. Either way, debt consolidation through refinancing is a great way to save money by rolling all your other high-interest debts such as credit cards into one simple monthly payment, potentially saving you thousands of dollars.

Your Home Is Where The Help Is

Many homeowners don’t fully understand the power they have in the equity in their home. With enough equity in the home, homeowners can refinance, perhaps even at a lower interest rate, and use a handy debt consolidation loan to roll all necessary debt into one payment. There are many benefits to a debt consolidation loan. Not only do you spare yourself the headache of multiple high-interest debts (which means you’ll pay less in overall total interest while helping to improve your credit score), but with a debt consolidation loan, you have the convenience of only having to pay one lender.

In addition, if you haven’t noticed, nearly 10 percentage points separate today’s average 30-year-fixed-rate home loan  interest rate and today’s average credit card interest rate. That’s nearly a 10% reduction in your interest rate just by moving the debt.

MiLEND Can Help

Because your home is easily the largest purchase you’ll ever make in your lifetime, MiLEND understands how important it is that you receive the right information so that you can make a decision you can feel confident about. At MiLEND, refinancing is a specialty, and they have plenty of options that can help you save money, and possibly improve your credit standing. Whether it’s a no-closing-cost loan, temporary ARM loan, 20-year fixed rate loan, or any of their other convenient loan options, Contact MiLEND today and see how their helpful and knowledgeable staff of friendly loan experts can help!

Good to Know: The Role of a Closing Attorney and the Title Company

Good to Know: The Role of a Closing Attorney and the Title Company 1024 536 John Robinson

Good to Know: The Role of a Closing Attorney and the Title Company

 

There are many steps involved in this process. From beginning to end it goes roughly as follows:  When a lender meets with a borrower, for either a purchase or a refinance, the lender requests a title search to find out what, if any, liens have been placed against the property. The title search will also verify the names on the property title.

 

In a refinance or purchase transaction the lender will order the title search through the closing attorney which is usually the lender’s attorney in a refinance and the seller’s attorney in a purchase transaction.  The closing attorney performs a title search, or abstract, pulling data from the recording body, usually the county the property is located in, to determine what liens are on that property.  If there are unexpected liens, the borrower will be able to address them with the seller before closing.

 

The Closing attorney will often offer title insurance through a title company the attorney represents.  Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or defects in the title to the property. Once the transaction is ready to go to closing, the closing attorney will prepare the closing documents and reconcile the figures from both sides of a purchase transaction or with the borrower in a refinance. Once everyone is in agreement, the closing attorney receives the funds sent by the lender and then distributes these funds to the parties involved in the closing.

 

At the closing, the closing attorney will review the documents with the borrower.  Keep in mind though that the closing attorney is unable to give advice or direct a borrower or seller as to a course of action if questions arise. Borrowers should always have either an attorney or someone knowledgeable about the lending process involved. After the closing, the closing attorney will arrange to have the recordable documents sent to the recording body to be recorded.

VantageScore: The New Method of Calculating Credit Scores

VantageScore: The New Method of Calculating Credit Scores 1024 536 John Robinson

VantageScore: The New Method of Calculating Credit Scores

The math behind your credit score is getting revamped, with changes big enough that they might alter the behavior of both cautious spenders as well as riskier borrowers. Those with low scores may benefit from the removal of civil judgments, paid medical collections, and any paid collection and tax liens.

The New Method “VantageScore”

The new method has already begun being implemented by VantageScore, a company created by the credit bureaus Experian, TransUnion and Equifax. It’s not as well-known as Fair Isaac Corp., who’s FICO score is used for the vast majority of mortgages. But VantageScore handled 8 billion account applications last year, so if you applied for a credit card, that score was likely used to approve or deny you.

Trending Data

Using what’s known as trended data is the biggest change. The phrase means credit scores will take into account the trajectory of a borrower’s debts on a month-to-month basis. So a person who is paying down debt is now likely to be scored better than a person who is making minimum monthly payments but has been slowly accumulating credit card debt.

Who Is Affected the Most

People with high credit scores may be affected the most since the goal of trended data is to see warning signs long before a borrower actually gets into serious trouble.

Reasoning Behind Removing Judgments, Tax Liens And Medical Debt

Taking civil judgments, medical debts and tax liens out of the equation comes after a 2015 agreement between the three credit bureaus and 31 state attorneys general. The argument was that civil judgments and tax liens -which can significantly hurt a person’s credit score – were often full of errors. Medical debt was being reported on a person’s credit report before there was time for insurance to reimburse.  People with those items on their credit reports now could see a bump of as much as 20 points. But it won’t help much if they also have negative marks like delinquencies and debts that have gone to collection.

Contact MiLEND today and see what all their loyal, satisfied customers have been saying all along. When you combine their level of world class customer service with the benefit of saving money, it becomes clear that MiLEND is the premier lender to use for all your loan and mortgage needs!

Conventional and FHA Loans: Which is Best?

Conventional and FHA Loans: Which is Best? 1024 536 John Robinson

Conventional and FHA Loans: Which is Best?

While the list of options seems to be shrinking for mortgage customers, understanding the differences between two of the major programs, Conventional or FHA, and when you might want to use each, should help to make you a more informed consumer.  Each has its own unique benefits.

Benefits to Conventional Loans

One benefit to having a Conventional loan is that there is no upfront mortgage insurance premium required and no mortgage insurance required if the loan-to-value is 80% or less of the value of the home.  FHA, alternatively, charges 1.75% of the loan amount as an upfront mortgage insurance premium and there is also a monthly mortgage insurance premium regardless of the loan-to-value position.  If the loan amount on the Conventional loan exceeds 80% of the home’s value, there will be a monthly mortgage insurance payment. In lieu of a monthly payment on conventional loans, though, a client may opt for a single premium option. Ask one of our licensed loan officers for additional information, and which is right for you. Keep in mind, again, that no upfront mortgage insurance premium is charged on conventional loans.  The monthly mortgage insurance payments may be cancelled, on conventional loans, when the loan-to-value of the mortgage reaches 78% of the home value (additional specifications may be required, per mortgage related guidelines).

Conventional loans can be on multiple property types as well. Eligible properties include: Owner-occupied properties, second homes and investor properties. FHA loans are available only for Owner-occupied properties (unless when performing a streamlined refinance, or under special circumstances).

Benefits to FHA Loans

FHA loans do not require as much of a down payment as a Conventional loan.  FHA allows a down payment of as little as 3.5% of the sales price compared to a Conventional loan that will generally require a minimum down payment of 5.0%. FHA also has lenient guidelines, pertaining to less than ideal credit history and income requirements, as opposed to Conventional loans, which can be more difficult to qualify for, in certain situations.

FHA allows for a streamline refinance on an existing FHA loan with limited credit requirements, no appraisal required, nor income verification.  Conventional refinancing requires a full credit review, income verification and the need for a new appraisal (unless when taking advantage of Fannie Mae or Freddie Mac’s Home Affordable Refinance Program).

 

Contact MiLEND today and see what all their loyal, satisfied customers have been saying all along. When you combine their level of world class customer service with the benefit of saving money, it becomes clear that MiLEND is the premier lender to use for all your loan and mortgage needs!

What You Need to Know about PMI

What You Need to Know about PMI 1024 536 John Robinson

What You Need to Know about PMI

Private mortgage insurance (PMI) is a reality that is hard to escape, especially for first-time home buyers.  PMI does not give the borrower additional homeowners’ insurance coverage but rather protects a lender against loss if the borrower defaults on a loan, and enables borrowers with less cash to have greater access to home ownership.

The cost is based on the type of mortgage product you secure, the amount you borrow for your house and the amount of your down payment,  and is added to your monthly payments. On average the cost runs about 5% annually of your total mortgage amount.

Removing PMI

Private mortgage insurance should never be permanent. Prior to agreeing to and signing the mortgage loan, ask for a written disclosure from your lender stating when the PMI payments can be removed from the monthly mortgage payments.  Once you have paid at least 20% of your loan, it is up to you to contact your lender and ask to have the PMI payments terminated.  It is a good idea to make this request by phone and in writing.  They most likely will agree to do this if you have made your mortgage payments in a timely manner.

To avoid PMI, consider asking your mortgage broker if they will waive private mortgage insurance requirements if you accept a higher interest rate on the mortgage loan.  If they do, you may see on average an increase of .75% to 1%, depending on the down payment.

Contact MiLEND today and see what all their loyal, satisfied customers have been saying all along. When you combine their level of world class customer service with the benefit of saving money, it becomes clear that MiLEND is the premier lender to use for all your loan and mortgage needs!

Fannie and Freddie Explained

Fannie and Freddie Explained 1024 536 John Robinson

Fannie and Freddie Explained

With all the talk these days in the world of mortgages about Fannie Mae and Freddie Mac, it is worth considering – who they actually are and what do they do?

Fannie Mae is the Federal National Mortgage Association, and Freddie Mac is the Federal Home Loan Mortgage Corporation. They are what’s called government-sponsored entities, GSEs.  Although they have recently been taken over by the federal government, they are still publicly traded companies (both are listed on the NYSE).  What GSEs do is provide mortgage lenders with funds.  The lenders in turn lend the funds to end consumers.

The process, from beginning to end, goes basically as follows:  Fannie and Freddie, through the use of investors raise money to provide to lenders, who in turn lend that same money to people who are either purchasing, or refinancing a home.  Lenders find borrowers whose income, assets, and credit fall within a previously determined set of guidelines.  Once the loan transactions are completed by the lenders, the GSEs buy these individual loans from the lenders and package the loans into what are called mortgage-backed securities.  The mortgages are packaged together based on the type of loan (30-year fixed, 5/1 ARM, etc.) and on the profile of the borrower.

There could be hundreds or thousands of loans in each security.  These securities are then sold, to investors, who trade them as they would other types of securities, in markets around the globe. Most of the mortgages in this country are obtained within the guidelines of Fannie and Freddie.

The qualified professionals at MiLEND are more than happy to discuss the programs these two organizations offer. For over two decades, MiLEND has helped thousands of home buyers make their American dream come true. Their helpful, licensed loan experts will take the personal approach to getting you approved for a home loanrefinancereverse mortgage, or any one of their other helpful loan products or services.

Contact MiLEND today and see what all their loyal, satisfied customers have been saying all along. When you combine their level of world class customer service with the benefit of saving money, it becomes clear that MiLEND is the premier lender to use for all your loan and mortgage needs!

Using Your Tax Refund For Good

Using Your Tax Refund For Good 1024 536 John Robinson

Using Your Tax Refund For Good

With the annual tax season officially over and “in the books,” (pun intended) many cash-strapped renters are receiving tax returns and seeing this as a great opportunity to use their tax refund as a down payment on a home of their very own. Getting off the “rental-go-round” is something nearly every renter dreams of doing, given all the benefits that come with home ownership, but the cash for a down payment stands as a hurdle for most prospective home buyers.

Every Little Bit Helps

For simple math, we will say that you are looking at a house that costs $200,000. This is a nice round number that makes it a bit easier to explain what a down payment will do for you and what you should consider when you start looking at how much you want to put down up front. Your lender or bank is taking a big risk on giving you a loan, so a down payment is a form of insurance that is going to make it more likely that you do not default. This is why a higher down payment is generally asked for.

Even though the average tax refund in 2016 was around $3,000, it’s still a sizable amount that can be used toward the down payment on a number of different types of home loans, even if only a part of it, especially for first-time owners. Add to that the fact that spring/summer is the most popular time of year to move and it seems to make more than enough sense. When you consider the fact that the more money you put down in the form of a down payment, the less you’re going to owe over the term of the loan, it makes good financial sense to put down as much as possible when you have the cash. Financial experts will always caution you against splurging with a tax refund, because not only did the federal government withhold a certain percentage of your income, but they did so without paying you any interest for it, so you should make sure to do something constructive with it. Tossing the money away on something frivolous that offers no value in return is like adding insult to injury.

Where To Start

To get started, look into community mortgages. Backed by the federal government, Fannie Mae and Freddie Mac are also offered by independent private lenders. The qualified professionals at MiLEND are more than happy to discuss the requirements for these programs prior to your application for a home loan to ensure that you’ll qualify when the time comes. For over two decades, MiLEND has helped thousands of home buyers make their American dream come true. Their helpful, licensed loan experts will take the personal approach to getting you approved for a home loan, refinance, reverse mortgage, or any one of their other helpful loan products or services.

 

Contact MiLEND today and see what all their loyal, satisfied customers have been saying all along. When you combine their level of world class customer service with the benefit of saving money, it becomes clear that MiLEND is the premier lender to use for all your loan and mortgage needs!

Is a 20% Down Payment on a Home Necessary?

Is a 20% Down Payment on a Home Necessary? 1024 536 John Robinson

Is a 20% Down Payment on a Home Necessary?

Buying a home is a big part of your life. It is likely the single largest investment you will make. It is also going to be something you are paying for over the course of many years of your life. So, before you even get started on your house hunting search, is it even necessary to put any money down? Can you just go in, take out a big loan and move in when you are ready? In short, no, some form of down payment is required, but the bigger you can go, the better.

Down Payment Considerations

For simple math, we will say that you are looking at a house that costs $200,000. This is a nice round number that makes it a bit easier to explain what a down payment will do for you and what you should consider when you start looking at how much you want to put down up front. Your lender or bank is taking a big risk on giving you a loan, so a down payment is a form of insurance that is going to make it more likely that you do not default. This is why a higher down payment is generally asked for.

How Much Should Be Put Down

So the root of the question is how much you actually need to put down when taking out a loan. In all honesty, 20% is a good percentage to go with, but that may not be realistic for many buyers. So let us look at the different amounts and the benefits and drawbacks of smaller down payments. If you put down a small amount, say 3%, which is generally the lowest a lender will accept, you will need to also pay for PMI, or private mortgage insurance. This is called an annual premium, but you will be paying it monthly. So, you put down $6,000 towards your loan, but your PMI will be calculated and often cost somewhere around $150 or more. If you put down 20% on the other hand, you won’t need to pay a PMI, so your payment will go towards your monthly premium and interest.

Again, if 20% is too much, try to get as close as possible. A 10% down payment or $20,000 will give you a monthly PMI of under $70. While it is not ideal to have any PMI, as it is essentially wasted money, in the long run, reducing it as much as possible is your best option if you can’t hit the 20% down payment. There are a few other considerations that can come into play, such as FHA insurance. This insurance is paid to the federal government and requires you to pay an upfront premium as well as monthly premiums. Finally, a lower down payment will often cause the lender to charge you fees at closing. If you can’t pay the fees, they may increase the interest rate. So ultimately, the best bet is to pay the 20% down payment where possible. If you can’t, just understand that you are going to be throwing money at your loan that ultimately let you get into a house earlier than you would have otherwise. It is something to consider and there is no right answer, but a 20% down payment is probably your best bet in the long run.

Contact a MiLEND mortgage expert today to discuss the available options you have when making your down payment.

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