Common Mortgage Mistakes That Give You "Mortgage Approval-Ivy"

Common Mortgage Mistakes That 
Give You "Mortgage Approval-Ivy"

When our boys were little, we decided to construct a home in the Lincoln-Way Area of the Chicago Southland.  When choosing a lot to build on, we visited subdivision after subdivision in the area.  

After deciding on the subdivision we wanted, we began a search for our building site.  We walked property after property trying to find the "perfect" lot.  

The lot we ended up choosing was located at the highest point of the street ... great for drainage.  And the lot was filled with trees that, although small at the time, would mature into nice shade for our home once the land was cleared and sunshine could reach them.

After the construction of the home was behind us, there was still a lot to do to outside in the yard.  We dug, planted, added landscaping, mowed and pruned.  After a few years passed, the flowers bloomed, the plants and shrubs matured, and the trees filled out providing the shade we had hoped for.  Everything flourished.

Even the poison ivy ...  

Poison ivy was the one negative I found living on that wooded lot.  I ended up itching ... a lot.

Now anyone that has suffered through poison ivy will tell you plain and simple ... it's awful.  The itching and irritation drive you crazy and it's hard to get rid of.  

I quickly came to the conclusion that the best solution for treating poison ivy was to NOT catch the dang stuff in the first place.  I think that's the best solution for "Mortgage Approval-Ivy" too.  

What's Mortgage Approval-Ivy?  

It's the irritation, angst, and suffering felt by mortgage applicants if they commit one of the following mistakes after receiving mortgage approval: 

     Mistake #1:  Accepting a gift or check from someone NOT named on the Contract or Loan Application and then using it for Earnest Money.

     Recommendation:  If you are the Buyer and Loan Applicant, the check for Earnest Money should be written from your funds.  Think of this money as an advance on your down payment ... or the funds needed to Close - and therefore, that money has to be identified as being yours (or at minimum, communicate to your Loan Officer that the EM will be a gift from a Family Member.  Act proactively in this regard.  Processing will move more quickly and smoothly).
     Alert:  Checks from Non-Borrowing, Non-Buying Parties cause problems ... and "Mortgage Approval-Ivy"! 

     Mistake #2:  Needlessly transferring money from one bank to another ... or from one account to another within the same bank - can cause issues.

     Big Misconception:  All funds needed to cover down payment and closing costs (commonly known as "Cash to Close") must be accumulated or deposited to one account.
NOT TRUE!
     Separate bank accounts (or Investment accounts) can all be verified and documented ... and their collective balances can be totaled to demonstrate enough "Cash to Close" (funds needed by Borrower(s) for Approval/Closing).
     Alert:  Needlessly moving funds back and forth between accounts creates a longer paper trail for documentation.  This slows the mortgage process down and causes "Mortgage Approval-Ivy".  

     Mistake #3:  Working fewer hours during the time leading up to your Application for Mortgage.  

     Tip:  This is especially important for hourly-paid employees.
     Alert:  Mortgage Underwriters look unfavorably when comparing low/lower, Year-to-Date gross incomes reported on submitted pay stubs to earlier incomes/pay stubs. (The most recent pay stubs are required from Applicants at the time of Mortgage Application).  Avoid "Mortgage Approval-Ivy" by continuing to work your normal amount of hours at your job, when possible.

     Mistake #4:  Accepting cash or "Gifts of Cash", then depositing them into the bank account for which the funds for Closing are then verified.

     Tip:  There are NO acceptable means by which Cash can be verified (and found acceptable) by a Mortgage Underwriter.
     Alert:  Stay safe from "Mortgage Approval-Ivy".  STOP depositing cash into accounts provided for Mortgage Application. 

     Mistake #5:  Changing jobs prior to ... or after ... applying for a Mortgage without consulting with your Loan Officer (me).

     Alert:  Even if it's a better or higher-paying job, avoid "Mortgage Approval-Ivy" by talking to your Loan Officer prior to making any change in employment.  That way your LO can advise you as to how to best proceed.

The bottom line is this:  Don't subject yourself to any of these predicaments during your mortgage process.  Follow the advice of your Loan Officer from beginning to end.

And should you have questions?  Contact your LO and ask them BEFORE you take any action.  

It will keep "Mortgage Approval-Ivy" at bay and keep irritations from arising ...

* Hoping 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.

nmls #175656

Direct: 815.524.2280

Cell or Text: 708.921.6331

eFax: 815.524.2281

www.genemundt.com

gmundt@goapmc.com

 

                  

Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 

Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago 

and the greater Chicagoland region, including: 

The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 

Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 

Romeoville, Naperville, etc.), DuPage County, the City of Chicago, 

Cook County, and elsewhere within IL & WI.

Referrals are Welcomed!

Late Mortgage Payments: How and How Much They Can Hurt

Late Mortgage Payments: 

How and How Much They Can Hurt 

From client info, applications, communications, mortgage industry news, marketing ideas, to social media and more, it seems like I'm reading all the time these days.  The gathering (and sharing) of info is vitally important for an LO. 

But as many have found ... and is being energetically discussed currently ... the info found on social media can be a mixed blessing.  An unbelievable wealth of valuable info is out there, but then there's a whole lot of ... well, let's just call it "unreliable and erroneous" info too.  

When that unreliable and erroneous info is financial, credit, or lending in nature, it can have consequences.  And it definitely catches my eye, so I try to address this issue head-on by blogging and sharing the correct facts.   

As you probably guessed at this point, something I recently read did just that and it motivated me to write this post.  What was it?  It was a tweet containing a link to info regarding late mortgage payments.  

The source of the info shared within the tweet was a well-known organization.  One relied upon heavily by professionals within our industry and consumers alike.  

Now I believe it's likely that many read the info contained in the tweet's article.  They probably assumed the info was correct.  

Being kind, I'd say the info provided within the tweeted article misleads consumers into:

• Thinking the damage done to their credit by a late payment could be minimal or easily absorbed
• Being lulled into a false security. One that possibly keeps them from making an immediate/needed payment 
• Not taking immediate action of any kind 

Consumers need to know that ... depending on the consumer, the consequences felt from a late payment could range from mildly damaging to severe. 

What the article in question did not address was two-fold:  

     1.  The article did not stress strongly enough that, like many other facets of credit and mortgage financing, the damage wreaked by a missed mortgage payment can vary greatly between one consumer and another. 

For that reason, it's vitally important that anyone about to miss a mortgage payment talk to their Loan Servicing Company, or YOUR Personal Mortgage Lender, immediately.  That way they get personalized factual info and guidance in order to move forward ... but to also lessen any credit damage that might be done.  

If a consumer is hoping to finance a new home in the near future:  The need to talk to a Lender regarding any late mortgage payment(s) becomes even more intense.  

The TIMING (and success) of any future mortgage application could rely heavily on how recently a late mortgage payment was made.  Again, a Lender can provide timely info and guidance that will best assist in securing better credit health and future mortgage approval. 

     2.  The tweeted article also did not raise this important fact:  Depending on the type of loan being applied for,  underwriting rules regarding mortgage approval can vary.  

     Example:  What is true for Conventional Mortgage underwriting/ applications varies from those of FHA underwriting/ applications.

Now you know why I always say it's so important to seek the expertise of a Mortgage Lender.  One that understands credit issues fully and has experience in dealing with them successfully. 

With that said, below you will find some very basic answers to the following questions regarding Late Mortgage Payments: 

     1.  What constitutes a late payment?  

     First, it's important to understand the difference between an overdue payment ... and one that is actually late.

     An OVERDUE payment:  

     Most Lenders or mortgage servicers provide you a "grace period" in which you can still make your mortgage payment without actually being considered "late".  

     Mortgage payments are typically due on the 1st of each month, with a grace period extended you of approximately 15 days.  You may be assessed a penalty for making your mortgage payment during this grace period, but most likely you are not in danger of being reported to the credit bureaus.

     

     A LATE payment:

     A payment is considered late when it is not made within the month it is due.  (That means actually in the possession of the Lender/mortgage servicer, not the postmark or "sent" date of a check or payout from your bank.)    

               
     2.  When do Lenders report a late payment(s) to the Credit Bureau?

     Lenders typically report late payments to the credit bureaus once they are 30-days past their due date.  

     3.  How does a late payment affect your Credit Scores?

     Here is where the asterisks start flying and the individual consumer's personal credit history becomes so important.  Why?  

     The credit standing you hold prior to your late payments influences how much a "hit" you receive to your credit scores.  Plus, the more/longer late payments reported, the more severe your credit is affected.  The recipe for the "hit" is very personal to your individual debt and credit.

     4.  How does a Mortgage Underwriter typically view a late payment ... and can that late payment affect Mortgage Approval? 

      Ironically, when in the mortgage process, the more recent the 30-day late payment is, the more damaging it is to your credit ... and the more likely it is that it will hurt your chances of receiving mortgage approval to buy (or refinance) a home.

     

     Remember I mentioned above that the type of mortgage you apply for dictates how Mortgage Underwriters will view late payments?  I refer to the "recipe" concept once again here.  

     The credit standing, debt, and finances of each consumer applying for a loan are unique to them.  The same can be said as to the results reaped by a late payment(s).  

All of the above only highlights even more (yes, I stress it once again) the absolute need to work with an experienced LO during what is a more challenging mortgage application.  

And it only elevates the importance of sharing correct information with consumers, as the mortgage process can be confusing enough without consumers and future mortgage applicants receiving old, untimely, or erroneous information that does not pertain to their specific borrowing scenario.  

For the best results, answers to your questions, most personalized facts, guidance, and assistance ... reach out to a Lender.  Whether it be for information regarding your credit or late payments. Whether it be about buying a new home or refinancing your current one.  

Don't hesitate and don't wait ...

* When in need of Mortgage info or service when buying or refinancing a home in New Lenox - elsewhere in Chicagoland - IL & WI, contact me. I'll be happy to 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.

NMLS #175656

Direct: 815.524.2280

Cell/Text: 708.921.6331

eFax: 815.524.2281

gmundt@goapmc.com

www.genemundt.com

   

Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 

Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago 

and the greater Chicagoland region, including: 

The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 

Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 

Romeoville, Naperville, etc.), DuPage County, the City of Chicago, 

Cook County, and elsewhere within IL & WI.

Referrals are Appreciated and Welcomed

Real Estate - Financing Juggling: Selling & Buying a Home at the Same Time

Real Estate - Financing Juggling:

Selling & Buying a Home at the Same Time

The definition of juggling is ...  

A continuous tossing into the air and catching 

(of a number of objects) so as to keep a minimum 

of one in the air while handling the others ...

For those trying to sell a home while buying another,

it can feel just like that ... a juggling act requiring great timing, luck, balance, and concentration.

Back in the late 1970's when I was a rookie loan officer, the practice of selling and buying a home simultaneously was a fairly common practice.  Not so anymore.  

There are many reasons why this has become true, but one stands out most.  Available housing for sale is in short supply creating very competitive buying scenarios in many markets.  

In these competitive housing markets, Sales Contingencies won't cut it come Offer time.  Sellers typically won't consider Offers/Contracts that contain them.  They don't have to.

It's also true that the process of selling and or buying -financing a home is now more detailed too.  Many people are just not keen on "juggling" everything at once.  They prefer to consider, then learn, then tackle one step at a time.  

Those steps should include:  

• Seek housing and financing counsel & advice
• Sell their current home
• Secure Mortgage Pre-Approval 
• Search and find their new home
• Sign a Contract to Buy

To assist them in accomplishing this, I, as their Mortgage Originator, must have a complete and thorough understanding of their financial/credit background and standing.  In the sell-and-buy scenario, there are additional questions and considerations (beyond the norm) that must be raised and discussed in order for my clients to make the most beneficial decisions for themselves moving forward.  

Some of those questions can be:

• How quickly are homes selling in their current home market?
• What are comparable homes selling for in their area?
• Does the market support a "Contingency Offer" being made on their   new home, should their current home not sell immediately?
• What is the likelihood of that Contingency Offer being accepted by Buyers?  
• What amount of equity do they hold (if any) in their current home?
• If necessary, could they sustain TWO mortgage payments, should their home not sell?
• How long could they sustain 2 home payments?
• What is their personal comfort level with this possible scenario ... their "risk tolerance"?
• What kind of cash reserves/savings do they have available?
• If your current home sells prior to your finding a new one, do you have somewhere you can stay in the interim prior to Closing?  Rent, etc.?  
• More ...

My focus as their LO must also remain on their education. It's very important for them to know the facts regarding all their financial options and the costs of selling and buying their home.  

It's at this point that I find many Home Sellers are surprised there are Seller's Costs involved in the sale of a home.  And specifically, what those Seller's Costs will total for them.

Costs that remain the responsibility of a Home Seller in the Chicagoland/IL area typically include:

• Real Estate Commissions (if Agent(s) services utilized) 
• Title Company expenses
• Attorney Fees (if Attorney services utilized)
• Contractual Items (if involved in Sale/Contract)

       1.  Survey

       2.  Termite Inspection

       3.  Home Warranty Costs 

       4.  Home Inspection Repairs

       5.  Real Estate Transfer Taxes/Fees

• Real Estate Tax Proration (owed to Home Buyers at the time of Closing)

I'm sure other locations/states have other Sellers' costs that could be included in this list, but again ... these are costs often seen in the Chicagoland/IL housing market(s).  

Typical Seller Costs can range anywhere from 8% to 10% of the Contract Price and are dependent on the costs agreed upon in your specific transaction ...  

Example:

Sales Price = $200,000

Typical 8% to 10% Seller's Costs = $16,000 to $20,000

So how do you calculate the Net Proceeds you'll realize from your home sale? 

Example:  How to Figure Net Proceeds

Sales Price

- (minus)

Total Seller's Closing Costs 

- (minus)

Current Home's Mortgage Balance

= (equal)

Final Net Proceeds of Home Sale

The dollars represented by your Final Net Proceed represents the money available to you for your next home purchase (for Down Payment and Closing Costs). 

The above calculations, the menu of costs (both sales and purchase), the variety of possible sales/purchase scenarios and options, and need for information and sound advice ... reveal the vital importance of seeking and working with experienced professionals (both Mortgage and Real Estate).

My strong recommendation is:  Always seek that professional guidance and info PRIOR to taking any action regarding the sale of your current home or purchase of a new home.

To assist in your search for info, please consider reading my posts:

CASH to CLOSE:  Funds Needed at Closing

  How Seller-Paid Closing Costs

 Can Help You Buy a Chicago-area Home

Is it the Right Time for You to Sell Your 

Present Home and Buy the Next?

Bottomline:  Make sure you take the time to ask questions. Get fully-informed.  Then make your decisions.  You'll be glad you did. 

* When in need of Mortgage info or service when buying or refinancing a home in New Lenox - elsewhere in Chicagoland - IL & WI, contact me.  I'll be happy to 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.

NMLS #175656

Direct: 815.524.2280

Cell/Text: 708.921.6331

eFax: 815.524.2281

gmundt@goapmc.com

www.genemundt.com

   

Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 

Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago 

and the greater Chicagoland region, including: 

The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 

Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 

Romeoville, Naperville, etc.), DuPage County, the City of Chicago, 

Cook County, and elsewhere within IL & WI.

Referrals are Appreciated and Welcomed