Gene's Chicagoland Mortgage Blog: With Golf and Mortgages: It's Important to Know the Rules

With Golf and Mortgages:

It's Important to Know the Rules

There are a LOT of rules in golf ...

That fact has drawn increasing attention as of late. But truth is, golf rules have always provided controversy and remained front and center during golf tournaments over the years.

Just ask these golf pros:

LPGA star Lexi Thompson, PGA players Craig Stadler and Paul Azinger, golf mega-star Tiger Woods, and more. Not knowing ... or being unaware of a rule ... cost them strokes during important golf rounds and ultimately a win (and money) on the tour.

Strong parallels between golf and mortgage lending can be made. Be unaware or not know the rules of mortgage lending? It can possibly cost you ... in time, money, and opportunity to attain success.

Just as in golf, the rules of mortgage lending are important. They are intended to ensure all play by the same rules. The "rules" demand that Lenders ... and the entities that insure loans ... approve borrowers that are "qualified" to borrow money and have the ability to repay the loan in full, no matter race, sex, familial status, location of property (redlining), and more.

The Mortgage Pre-Approval is another good example of a "rule" existing in the modern mortgage process. While the act of being pre-approved was suggested by agents years ago, it has now become almost a necessity. While some agents may show a property to a potential Home Buyer that has not pursued Mortgage Pre-Approval, it's become increasingly rare.

So how and why did this "rule" come about? The process of obtaining a Mortgage Pre-Approval likely started with Home Buyers needing to prove an "edge" over their buying competition in a highly competitive housing market ...

When a Buyer proves they can successfully complete their home financing to buy, they're viewed more favorably by Sellers. It's easy to understand why most Sellers stick to this "rule" regarding Mortgage Pre-Approvals and entertain offers from pre-approved Buyers only.

It's easy to see why: Do otherwise, and they risk a possible loss of time and money ... and disappointment.

The backbone of any Mortgage Pre-Approval is the potential Borrower's Credit Report. In order for me to order a tri-merge Credit Report, I, as your Lender, need the following basic info from each Borrower to be placed on the Mortgage:

Full Name(s)

Address(es): 2 years required.*

Social Security Number(s) Date(s) of Birth

Permission to run the Credit Report(s)

*If you haven't resided at your current address for two years, info regarding previous address(es) is required. If currently renting, SOMETIMES, the following is needed: The Name, Address, and Telephone Number(s) of Landlord or letter from Landlord stating the amount of Monthly Rent and the Statement "Paid as agreed for past 12 months".

What does this all-important Credit Report disclose to your Lender?

It provides your Credit Scores from each of the 3 main credit bureaus: Equifax, TransUnion, and Experian. The middle Credit Score received is the score that Lenders utilize during your Pre-Approval.

Here's an example of that "rule" ...

Credit Bureau 1: 723 Score

Credit Bureau 2: 735 Score

Credit Bureau 3: 741 Score

The score the Lender uses is: 735

Why are Credit Scores so important?

Most mortgage loan programs/loan types have minimum Credit Score requirements. Some loans are simply not available to Borrowers with lower Credit Scores ... or those that don't meet minimum loan requirements.

"Rules" regarding Credit Scores are clear. The lower your Credit Score, the lower your chance of securing a Loan Approval. Likewise, lower Credit Scores typically mean higher Interest Rates, increased financing costs, or both. The higher your Credit Scores, the lower the Interest Rate earned for financing.

Once it's determined that you are credit eligible, you will be asked for more detailed information regarding:

Employment - Employment History
Current Employer
Length of Employment
Income
How you are paid (Salary, Hourly, Commission, Bonus, Overtime) Social Security, Pension, Investments - if retired or disabled)

Those items or documentation that will verify income will be requested at this time too. Those include:

W-2's
1099's
Tax Returns (Last 2 years)
PayStubs (Last 30 days, consecutive)
Court Orders for Support or Alimony ...

You then move on to the topic of DownPayment Funds. Be prepared to answer the following questions:

What DownPayment Funds do you have available, if any?
Are Gift Funds being provided to you? If so, by whom? How much?
Are you eligible for VA home buying benefits?

Note: Should you wish to flex your VA home buying benefits, you will be required to supply the following documentation in addition to all the basic info:

Copy of your original Certificate of Eligibility
Copy of DD-214

Most Buyers are typically asked for the following:

A copy of your Driver's License or State ID Card
A signed copy of the Real Estate Contract on the home you're purchasing, plus any Riders
Names & Contact Info for your Attorney
Name and Contact Info for your Insurance Agent

Where/when applicable, you may be asked for:

All pages of your Recorded Divorce Decree(s) or Separation Agreement(s)
12 Month Court Printout of Child Support received
Bankruptcy Papers: Recorded Bankruptcy Discharge, plus the Schedule of Creditors
Collection Documentation: Filed & Stamped Release of any Judgment, plus explanations of any outstanding Collections
Your most Recent Social Security Award Letter or Pension Award Letter

If you currently own Real Estate, you'll be required to provide the following info:

Mortgage Account Information
If applicable, info on any Home Equity financing
Home Insurance Policy Info/ Real Estate Tax Bill
Address and Info on additional Real Estate owned (Investment, Vacation/2nd Home, Timeshares)

For those that are self-employed and seeking Pre-Approval or Mortgage Application, the following documentation is typically required:

The last 2 years of filed Year-to-Date Profit and Loss Statement
2 years of complete Tax Returns

If you hope to be Pre-Approved and apply for a Mortgage, you can pretty much count on all the above questions and requirements being in play. Those are the "rules" with financing currently.

Yes, you're right ...

There are lots of "rules" involved in the current mortgage process. But as I pointed out above, a knowledge of the rules beforehand helps immensely.

Have questions? Ask them. The sooner the better. Want to know more about the mortgage process? Reach out to me. Hope to be Pre-Approved or apply for a Mortgage in New Lenox? Will County? Elsewhere in the Chicagoland area? Contact me.

Know the "rules" regarding mortgages ahead of time. Be aware of what info and documentation you'll be asked to produce during your Pre-Approval or Mortgage Application (and gather it pro-actively).

It helps you elevate your financing "game". Helps you avoid the "traps" and "water hazards" some find during their mortgage process. And it will make you a winner ...

* Hoping to be Pre-Approved ... or to buy or refinance a home in New Lenox or elsewhere in the Chicagoland area? Contact me! I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
I'm easily found at:

Gene Mundt

Mortgage Originator - nmls #216987 - IL Lic. 031.0006220 - WI Licensed

American Portfolio Mortgage Corp.