What To Bring to A Mortgage Application
- Photo ID and Social Security card
- Provide a detailed work history for 24 months preceding mortgage application including start and end dates as well as any gaps in employment.
- One month consecutive pay stubs (most recent)
- Two years W-2’s and/or 1099’s (most recent)
- Most recent two years Federal tax returns with all schedules if self-employed or more than 25% income from bonus or overtime (a year to date profit & loss statement may be required if self-employed)
- Most recent two years Federal tax returns with all schedules if owned rental property(s) and lease/rental agreements
- Divorce/separation/child support papers and proof of receipt of child support for 12 months, if disclosing as monthly income
- Two months most recent bank statements or most recent quarterly statement including checking, savings, investment, brokerage and retirement accounts (provide all pages, even if some pages seem irrelevant)
- List of all creditors including name, account number, current balance and payment
- Bankruptcy papers including petition, list of debtors and discharge of debtors
- Copy of the executed purchase contract including all addenda
- Plans and specifications for new construction if applicable
- Estimates for any construction costs not included in purchase contract
- Copies of deed, real estate tax receipts and survey map if available
- Landlord’s name(s) and telephone number(s) (covering 2 year history)
- Attorney information and real estate agent information including names, telephone numbers and fax numbers
- Copy of sales contract and listing agreement for sale of current residence or copy of HUD-1 if sale of property has already closed
- VA Certificate of Eligibility
- A check a for credit report and appraisal fee
The answer is, not at all! The Federal Housing Administration was formed in 1934 to provide financing for low- and moderate-income buyers, and there is no requirement that they are first-time buyers. There is also no maximum income for buyers. FHA has become a useful choice for many buyers whose credit situation might make conventional financing more difficult and more expensive.
FHA loans require a minimum down payment and mortgage insurance for the life of the loan. Although it is not a first-time buyer program, it is very popular with these buyers, partly because many communities offer down payment and closing cost assistance for qualified first-timers whose income falls beneath certain limits. FHA is also an excellent choice for those buyers whose credit scores are at the lower end of the scale. While conventional loans require a minimum FICO score of 620, FHA generally accepts much lower scores.
FHA does have a potential disadvantage, and that is the way mortgage insurance (MI) is handled. Lenders require mortgage insurance to limit their risk any time the loan is for more than 80% of the property's value. With a conventional loan, a borrower can ask the lender to remove the MI once they can demonstrate that the loan is less than 80% of the property's value. With FHA, the mortgage insurance will be in place for the life of the loan. Borrowers pay MI in two ways: an up-front premium that's added to the loan and a monthly premium that is also added to the payment.
If you would like more information about FHA loans or you know someone who is shopping for a home loan, contact your Loan Originator today.
Recent tax code changes could potentially affect the financial aspects of buying and owning a home. Several of the revisions impact areas like mortgage interest deductions and home equity loan deductions. To help clarify the updates, we’ve created a chart that shows the changes.
Exclusion of Gain on the Sale of a Primary Residence
Under the original proposed changes, homeowners would be required to live in a home for a minimum of five out of eight years to claim the capital gains exemption. It was decided however, that the current tax framework would remain the same: a homeowner who had lived in a home for a minimum of two of the previous five years wouldn’t pay anything in capital gain taxes if they sold their home.
How It Could Affect You: There are no major changes. The two of previous five years requirement will stay unchanged.
Mortgage Interest Deduction (MID)
Under the initial proposal, the limit on the mortgage interest deduction (MID) would be reduced from $1,000,000 to $750,000.
How It Could Affect You: This proposal reduces the limit on deductible mortgage debt to $750,000 for new loans taken out later than December 14, 2017. Assuming a 20% down payment, reduction in the MID will only impact buyers who are purchasing a home in the price range between $938,000 and $1,250,000. Experts have mixed reactions, with some feeling that it will have little impact on the market and others feeling it could be potentially detrimental having a limit on the MID raising taxes for those who itemize.
State and Local Taxes (SALT)
The original proposal includes the elimination of the state and local tax deduction (including property taxes). Under the new tax code, itemized deductions of up to $10,000 for state and local property taxes and income or sales taxes.
How It Could Affect You: Experts agree that higher taxed regions will be primarily impacted, as those homeowners now have a cap on these deductions. Some people might choose to live in one state over another because of taxation. This could impact demand on housing in some states.
What Does It Mean for Buyers?
Many families consider homeownership an essential part of the American Dream, and don’t necessarily purchase a home simply for the tax advantages. So even with the tax code changes, the main reasons people purchase homes (stability, freedom, building equity) are unlikely to be affected. If you are considering purchasing a home, speak with your Homestead Funding Loan Originator to review how the new code will impact you.
Homestead Funding was recently listed as the #1 Company to Work For by Mortgage Executive magazine! Each year, Mortgage Executive magazine, a nationally distributed trade publication, polls Loan Originators around the country to see how they rate the companies they work for.
Over 10,000 Loan Originators from over 200 companies were asked to rank their companies in areas like company culture, underwriting, marketing, technology. Based on the number of votes and the average scores, the magazine complies its list of the “50 Best Mortgage Companies to Work For.”
“We are honored to be named the best place to work by Mortgage Executive magazine,” said Jeff Mason, Human Resources Director for Homestead Funding.
This is the first time Homestead has been #1! For the past several years, Homestead has made the top five. We hope to continue this trend and make 2018 even better.
The Federal Reserve’s (the Fed) actions indirectly impact the prices you pay for gas, rent and even your groceries. For years, the prospect of a higher national interest rate has loomed over prospective homebuyers. Now that the Fed has decided to increase the federal interest rate in December of 2017, something that had not happened since the 2008 financial crisis, it’s important to understand how recent and future rate increases will affect mortgage rates.
Mortgage Interest Rates
We’ve already begun to see an increase in residential mortgage interest rates. The rate for a 30-year fixed mortgage hit 4% in 2017. Some analysts are projecting we could reach the 4.5-5% range in 2018. In other words, the longer buyers wait, the more expensive it may become to purchase a home.
There are several reasons for this, but one of the biggest is the federal funds rate. If the Fed thinks prices are rising too quickly, they raise interest rates. The Fed lowered the federal funds rate to stimulate the economy during the 2008 recession. That lowered interest rates and propped up the economy.
Whether you’re looking to purchase or refinance a mortgage, rates are relatively low at this point, historically speaking. If you’re on the fence, this is a great time to lock in a rate.
Refinancing and Adjustable Rate Mortgages (ARMs)
Many homeowners with adjustable rate home equity lines of credit may be affected. Unlike an adjustable rate mortgage, home equity loans will reset immediately rather than once each year. While it won’t be a drastic change in 2018, those concerned with the escalation of rates might want to consider converting the balance into a fixed rate option will rates are still relatively low.
Mortgage rates are not directly impacted by the federal funds rate, but the interest rate you can obtain on a home equity line of credit (HELOC) is. However, there are ways to manage home equity debt in an environment of rising rates. One option is to refinance into a fixed-rate home equity loan.
We understand that every financial situation is unique. No matter your situation, you can speak with a Licensed Loan Originator who can go over your scenario and give you the best possible options to help you out in 2018.