Monthly Archives: October 2015
Buying a new home, whether it’s your first or your fiftieth, is often both an exciting and stressful process. There are things you can do as a homebuyer that will decrease the stress side of the equation significantly so that when you find that perfect home, it can be smooth sailing through the closing process.
- Start with a mortgage loan prequalification: Financing is pivotal to purchasing a home for most homebuyers. Serious buyers should become prequalified for a home loan before they begin shopping. Being preapproved means the sellers will take your offer seriously while helping you clarify what you can and cannot afford. Serious changes like a change of job or default on bills during the loan making process can still jeopardize you loan – just report them to your loan officer right away to minimize harm.
- Have your down payment ready: Seldom does it work out for buyers who shop for a home before they have their down payment saved. It is tough to pull together large sums of money in a short time. Certain prepayments and other financial settlements are due at closing that do not count towards a home’s down payment so make sure you are financially prepared.
- Debt ratio and credit profile: Now is the time to resolve any outstanding credit profile problems. Consolidate debt, if necessary, to decrease monthly payments and pay off what you can. Generally speaking, your monthly expenses cannot exceed 45% of your monthly income.
- Don’t write-off your buying power: Business owners and those who are self-employed are able to write-off business expenses to minimize their taxable income. Keep in mind that excessive tax write-offs will lower your purchasing power since it plays a critical factor in your debt to income ratio.
- Don’t skimp on home inspections: A thorough home inspection including a separate termite and lead (if applicable) inspection may save you thousands in unexpected costs. Be sure to make you offer contingent upon findings. The buyer has the right to ask the seller to repair any problems with the home or adjust the purchase price pursuant to inspection findings. In extreme cases, inspections save homebuyers from the nightmare of purchasing a home in severe disrepair.
- Be prepared to discuss in detail these additional issues with your loan officer:
- Self-employment of two years or less
- The origin of and terms of any gift money or secured loans for down payment
- Any debts of which you are a co-signer
- Previous short-sales, foreclosures or bankruptcy in the past seven years
- Debt related to the IRS or spousal alimony/child support
- A new job including part-time work
- Deferred student loans
The good news is that whether you have a high credit score with a solid payment history or you lost a home through foreclosure or short-sale, an experienced, customer-focused loan officer is likely to have a loan product that will work for you as long as you’ve done your part in preparing to enter the market. Happy home hunting!
What’s new in the homebuying process? If you’ve met with a Las Vegas home mortgage lender recently, you were likely introduced to TRID. The acronym TRID represents a new rule that combines previous disclosures contained in the Truth-in-Lending Act (TILA) with the Real Estate Settlement Procedures Act (RESPA) to create a single set of rules, the TILA-RESPA Integrated Disclosures (TRID) Rules.
By combining several disclosure forms into one, TRID involves a new three-page Loan Estimator Form and a five-page Closing Disclosure, effectively decreasing the forms required to purchase a new home. This move is intended to improve compliance with mortgage laws as well as to provide better transparency and accessibility of information for homebuyers. The rule went into effect on October 3, 2015, and is applicable to all types of home loans except:
- Home Equity Lines of Credit (HELOC’s)
- Reverse mortgages
- Mortgages secured by a mobile home or not attached real property
The substantive changes to the rules include the following:
- Upon receipt of the application, the clock starts ticking for disclosure delivery as long as the loan officer receives the following: Name, Income, Social Security Number, Property Address, Estimated Value of Property, Mortgage Loan Amount Sought
- The Loan Estimate must be provided to the buyer by the loan officer no later than three days after receiving the loan application and no later than seven days before consummation (closing).
- The Closing Disclosure must be received by borrowers no later than three business days before consummation.
- In the event of revisions to the original application, a revised Loan Estimate must be received by borrower(s) no later than four days prior to consummation.
- The revised Closing Disclosure must be received no later than three business days before consummation if any of the following takes place: APR is not accurate, loan product changes, or a prepayment penalty is added.
- Variances, formerly known as tolerances, will limit fees that can be charged.
- A lender must provide a separate list of services to the borrower so the borrower is able to shop and identify at least one available provider for each service no later than three days after receipt of a loan application.
- Closing Documents
- The creditor provides the Closing Disclosure, including the HUD-1 information that the settlement agent was previously responsible to provide.
What Does All This Mean to the Buyer?
OK – enough of the technical language! What does TRID mean in reality for homebuyers?
- The rule alterations are intended to help borrowers understand their obligations and the obligations of the sellers, lender, Title Company and other partners easier; hence, it is called the “Know Before You Owe” rule.
- You will have more time to review the Closing Disclosure, prior to closing, so you can have all your questions answered.
- Closings can take longer. A closing period of 45 days or longer will often be necessary.
- Within four days of making the official loan application, you must confirm your intent to proceed to your lender.
- Electronic signatures will be used regularly. These signatures will reduce the wait periods lenders must comply within the new rules.
- A waiting period of three days between when you receive your closing documents and your closing is required and excludes Sundays and legal holidays.
- Turn all information into your loan office without delay. All items must be finalized within 10 days of your closing date to avoid a delay in the closing.
With all these changes, it’s great to know one thing will stay the same. Sydnee Johnson Las Vegas Home Loans will provide the best customer service combined with the best rates of any other loan officer in the area. With unmatched experience and attention to detail (not to mention a great personality!), Sydnee Johnson is a favorite among Greater Las Vegas area Realtors®, Title Companies, and borrows. Take a look at her reviews and see why!