Applying for Mortgage? What You Don't Know CAN Hurt You

Applying for Mortgage?

What You Don't Know CAN Hurt You

Are you familiar with the saying, "What you don't know can't hurt you?"  

According to the "Oxford Dictionary of Proverbs", it's derived from the saying, "So long as I know it not, it hurteth mee not", first seen in literature around 1576 and continuously thereafter.  So the saying and it's message has definitely been around awhile.

But what does this old saying mean?  

Historically it's meant that someone can't be made frustrated or unhappy by something they don't know.  It relieves people of worry and perhaps, even to a smaller extent, some responsibility.

But as a Mortgage Originator, I'm here to tell you ... 

When it comes to planning, buying, entering, or navigating the mortgage and home buying process(es) ... what you don't know certainly can hurt you.  

And frustrate you.  And cost you your time.  And cost you big money.

In the modern mortgage world, blindly starting the process to buy and finance a home prior to taking the time to educate and familiarize yourself to the process and the actions that will be expected of you is risky.  

Whether it be in time, stress, or money ... it can and will cost you to some degree.  So it's important for all hopeful home buyers and borrowers to proactively educate and familiarize themselves regarding the steps of the mortgage process and home buying topics.  

What are some of the most important things to know?

Following are some of those things it's most helpful to learn about and know prior to starting your mortgage and home buying process:

• Credit - Credit Scores - Credit Repair
• Money Management
• Home Affordability
• How to Choose a Lender
• How to Choose a Real Estate Agent
• Preparing your Finances to Buy 
• What to Include in an Offer to Buy
• Mortgage Application, Processing, Closing
• Mortgage Principal and Interest
• Mortgage Escrow Accounts
• Real Estate Taxes
• Homeowners Insurance (Flood Insurance)
• Home Appraisals
• Home Ownership
• Home Inspections
• Homeowner Associations
• Protecting your Investment after the Closing of your Mortgage
• and More ...

The information and steps mentioned above (and more) are extremely important to know for anyone taking out a mortgage or buying a home.  NOT knowing about them, at minimum, will certainly make the process more challenging and stressful.

Buying and financing a home is supposed to be a happy and exciting time in your life.  Why risk taking the joy out of it or putting yourself in a vulnerable financial or legal position?  

Take the time to do some research online.  Do some reading.  Tackle the homework and preparation needed.  And don't be afraid to ask questions.  

Thoroughly educate and familiarize yourself to what lies ahead.  What you learn is your best protection and the fastest route to finding the success you seek.  You'll definitely enjoy your home buying and financing experience far more too.  

The ball is in your court.  No one can do it for you.

Should you be in need of information or mortgage assistance in New Lenox - Will County - Chicagoland/IL - WI, please do not hesitate to reach out to me ...

* Are you hoping to buy or refinance a home or investment property in New Lenox, Will County, or elsewhere in the Chicagoland, IL/Wisconsin area?

Contact Me!  I'll put my 40+ years of mortgage experience and expertise to work answering your questions and fulfilling your financing needs.

I'm easily found at:

Gene Mundt

Mortgage Originator - NMLS #217987 - 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 Greatly Welcomed & Appreciated!

  

Using Retirement Funds ... 401K, IRA Accounts for Real Estate Purchases

Using Retirement Funds ... 401K, IRA Accounts

for Real Estate Purchases

There are several ways buyers can "fund" their home or investment property purchase beyond those funds they've built up via their savings accounts ...

As a potential home buyer, it's always important to discover and thoroughly investigate all options at your disposal.  Finding and working with a good loan officer makes a big difference in this regard.  

An experienced knowledgeable LO will do their homework and then present you with a menu of available options. Then they'll help you weigh the pros and cons of each as they pertain to you and your future plans.  

Now it's important to first point out:  "Low or NO Down Payment" mortgage programs exist.  And they certainly can help ease the need for large savings and down payments.

Some examples of those helpful mortgage programs are:

• VA Loans
• FHA Loans
• Home Ready Program (Fannie Mae)
• Home Possible/Home One Programs (Freddie Mac)
• USDA Loans
• IHDA * (100% Financing. Income Limits Apply. Funding is limited. Restrictions are also in place and apply. (* Illinois Housing Development Authority. Can be used for purchase of IL properties only.) 

And it's also important to add:  Beyond those mortgage programs mentioned above, help can be available to buyers/borrowers via the following methods.

• Down Payment Gifts
• Sellers Assistance
• Down Payment Assistance Programs
• IRA Withdrawals
• 401k Loans/Withdrawals
• More ...

But I'm going to focus in this post on 401k and IRA (Individual Retirement Accounts), where an account holder has "access" to their retirement funds before their retirements take place ...  

There are several ways that an employee with a 401K or IRA  can get to their funds if they're a hopeful buyer.  Those range from a loan against the balance of the account ... to an outright withdrawal of money.  

No matter the method of access, it's vitally important that each account holder/borrower know or learn the specifics of their own retirement plans/funds.  Each 401k or IRA plan can have different rules for loans and withdrawals.  I highly recommend, if you are considering either action, that you speak with your plan's administrator prior to moving forward.   

Of special note, if you're buying a first home:  In these instances, there are often specific provisions attached for that purpose.  Many plans allow an individual to withdraw funds without penalties for their home purchase.  It's wise to check with your administrator to see if that beneficial option exists for your first home purchase.

Also:  One's longevity with their employer may dictate if funds are available to be borrowed or withdrawn. 

If a provision of this nature exists, it's referred to as the "Vesting Period".  

It speaks to the number of years an employee is required to be in the company's retirement plan prior to being eligible to withdraw or obtain a loan on retirement funds.


Included in most (not all) cases:  An employee can typically borrow up to 50% of the TOTAL Balance of their account.  The funds can then be repaid* back into the same account via a payroll deduction made over a set period of time, usually 5 years.  *That "re-payment" of funds is NOT considered a monthly debt in most loan scenarios, note all the qualifiers for these actions.  

As you can tell from my paragraph above, there are many rules, regulations, and asterisks regarding 401K and IRA loans and withdrawals.  And again, they are why I so strongly urge all my borrowers to have a conversation with their plan's administrator prior to making any decision to tap their funds.  

All financial options should be presented, considered, and weighed by a borrower when hoping to buy.  But when retirement funds are being considered for use in a home purchase/financing, it's especially important that a careful review of account guidelines and rules be conducted and thoroughly understood.

For those considering the use of retirement funds for an investment property purchase, there may be special rules for them at play within their retirement plans.  Those I see most often are:

• Age of the Account Holder
• Rate of Returns
• Rules for accessing funds
• Special "terms" for gaining access (Loan or Withdrawal) to down payment funds by those purchasing an Investment Property

The use of retirement funds can be a very reliable and acceptable resource for funding a real estate purchase, for home or investment property.  But please ... protect yourself and your financial future.  

Take the time to fully-educate yourself prior to taking any action.  Consult your plan's administrator and your New Lenox - Will County - Chicagoland/IL - WI loan officer for information and advice along the way ...  

* Looking for financing answers, options, solutions, and experienced assistance? 

Are you hoping to Buy, Refinance or purchase an Investment Property in New Lenox, Will County, or elsewhere in the Chicagoland - IL - WI 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/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 Appreciated and Welcomed

  

Did You Receive a Mortgage Denial? Stay Calm and Take These Steps ...

Did You Receive a Mortgage Denial?

Stay Calm and Take These Steps ... 

Emotions play a big part in the home buying and financing processes.  In fact, an emotion (or two) may have provided most people the initial motivation to begin the process to buy in the first place ...

Emotions, such as curiosity, optimism, joy, excitement, pride, and even surprise drive people's desire to buy a home.  

Add to those the emotions someone may feel during mortgage pre-approval and application ... such as nervousness, fear, stress, and anticipation ... and it's easy to see why the processes of home buying and financing are likened to an emotional rollercoaster.

Typically, my posts focus on those actions borrowers can take to avoid or slow that emotional rollercoaster down.  My aim is always to guide them through those steps that will proactively position them and then assist them through their home's financing to a successful mortgage closing.

But what happens in those instances when we hit a roadblock?  When a denial for a mortgage is received?

First, it's important to know that, although dramatic and making for a compelling story, that outcome can typically be avoided through careful preparation, with time, and via the guidance of an experienced and knowledgeable mortgage originator.  

But in those instances where an actual mortgage application has been made and then denied ... what then?

Stay calm.  Don't panic ...

I've found that a denial returned at this point is typically not much of a surprise for those of my borrowers receiving it.    They know the details of those issues that might prove detrimental to receiving approval.   

Why?  I've held preparatory conversations outlining the strengths and weaknesses ... the pros and cons ... of their mortgage application with them.  They've been made fully aware of their odds for mortgage approval.

So typically at this point, it's a matter of our "re-grouping", so to speak.  And then finding another way of addressing those issues raised during their Underwriting Review.

What are those issues that result in mortgage denial most often?  Those contributing issues are:

• The Appraisal:  Value Concerns and Property Condition issues are the most commonly raised flags
• Something new (and adverse) has appeared since the Credit Report taken prior to Mortgage Closing.  (Example: A new credit application, such as those for a furniture or vehicle purchase or the appearance of a missed payment)  *Be Aware:  Lenders are required to reverify Credit and Employment within 10 (ten) days of Mortgage Closing.
• Employment changes*  See above re-verification info 
• Income changes  (Loss of income, reduction in hours, reduced overtime)
• Debt to Income ratios  (A result of "new/additional debt" or reduced income)
• Money in bank accounts have been moved or unaccounted cash deposits were made

It's important to know:  Receiving a mortgage denial in and of itself does NOT damage your credit score.  So do not fear that moving forward. 

But ... what comes next?

Continue to talk with your Mortgage Originator.  They will provide the details as to the findings of the Underwriter and your denial.  

Listen carefully and follow their instructions to address the issues raised.  Keep an open mind and consider/discuss all options available to you.

Many times issues and problems can be resolved easily and quickly and not derail your home buying transaction.   For those issues that demand more time and attention, it's vitally important to follow the advice of your mortgage originator.  

Focus razorlike on those issues contributing to the denial.  Roll up your sleeves and get back to work.  If credit damage was the culprit ... repair it.  Rebuild financial accounts, pay down debt, or rectify employment concerns.  

If an appraisal contributed to the denial received, consider all options available to you prior to moving forward.  Sometimes, appraisal concerns and issues can be negotiated items between Seller and Buyer, and thus resolved.  Remain in close communication with your agent and lender for advice resulting in the quickest and best results. 

As I said above, experiencing emotions throughout your home buying and financing process is only natural and to be expected.  The buying and financing of a home is a big step in someone's life.

Just don't let the emotions run away with you, blind you, slow you, or keep you from taking actions on your own behalf.  That advice is especially key when a denial for mortgage is received.

Stay calm.  Let the emotion of determination drive you forward.  

Confer with your mortgage originator.  Gather the facts that contributed to the denial, then take those actions that will reap you more positive results.  

* Looking for financing answers, options, solutions, and experienced assistance?

Are you hoping to Buy, Refinance or purchase an Investment Property in New Lenox, Will County, 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/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 Appreciated and Welcomed