Tag Archive for: mortgage advisor

Refinance Your Mortgage and Lock in the Best Rate (How To)

June 12, 2021
blog refinance

The recent dip in 10-year Treasury bonds is good news for homeowners ready to refinance a mortgage and first-time homebuyers. Whether you want to refinance your mortgage for a lower payment, apply for a cash-out refinance, or refinance your mortgage for a lower rate, now’s the time to take action.

Historically, a dip in Treasury yields translates to lower mortgage rates. Still, the economy is opening up, and rates have been near historic lows for months. Despite the downshift, mortgage experts predict rates to begin an upward rise soon.

Connect with a mortgage advisor to start the process early and lock in a low mortgage rate before they start to rise again.

Related: First-Time Homebuyer Advantages for 2021

How to Refinance Your Mortgage and Save Money in 5 Steps

Every borrower wants the best rate possible, and lenders will compete for your business if you’ve got a good financial track record. Borrowers with a good credit score and a low debt-to-income ratio will have leverage when deciding to shop around. But even if you’re financial picture isn’t where you’d like it to be right now, these tips will help you prepare.

When you apply for a mortgage refinance, the top three factors that will impact your mortgage application are your credit score, debt-to-income ratio, and home equity (loan-to-value ratio).

Take note of these five steps to leverage your knowledge and approach lenders with confidence.

Step 1: Protect your credit score.

Download a free copy of your credit report so you can resolve any errors or misinformation. If you have high consumer debt or multiple loans, pay down the balances to improve your credit score.

Keep making your payments on time and don’t take on any new debt or apply for new credit lines. Now’s not the time to open a new credit card or apply for a car loan. Keep your credit report as clean and consistent as possible when you’re ready to refinance.

Step 2: Shop around for the best mortgage refinance lender.

Just because rates are low doesn’t mean lenders will give you the best mortgage rate. Shopping for the best rate is a common strategy for most homeowners, but it’s smarter to shop around for the best mortgage advisor.

Yes, mortgage rates are one of the main factors borrowers consider when refinancing a mortgage. But the best loan terms are part of an overall package that goes beyond your interest rate. Fees, closing costs, points, and mortgage insurance are a few costs that can overshadow a low mortgage rate.

You don’t want to end up with a mortgage refinance that ends up costing you more and keeps you from meeting your long-term financial goals. 

We recommend shopping around for the best mortgage advisor. Read reviews, check in with colleagues, follow up directly when you find a low rate.

A great mortgage advisor will talk with you about your financial and homeownership goals. Together, you can refinance your mortgage with a custom solution that checks all the boxes. You should be able to refinance your mortgage with a low-interest rate, a better mortgage payment, and loan terms that meet your financial goals.

  • Do they deliver exceptional customer service?
  • Do they offer the refinance product you want (fixed, adjustable, streamline, cash-out, etc.)?
  • Do they understand your financial goals?
  • Do they have great customer reviews?

Related: When is it a good time to change mortgage lenders?

Step 3: Compare mortgage refinance offers to find the best loan.

Advertised rates are helpful metrics to find out where the market is trending, but refinancing a mortgage can end up costing you a lot of money if you’re not careful.

So, shopping for the lowest rate won’t always get you the best mortgage refinance. Instead, compare your refinance offers side-by-side using the loan estimates provided by your lender.

The truth is, mortgage rates vary based on the borrower’s information, the loan product, and the lender. Certain lenders might advertise super low rates, but they might offer you higher rates than other lenders based on your credit score. The same goes for your debt-to-income ratio and your home equity.

When you apply for a mortgage refinance, you’ll receive a quote, also called a loan estimate. Your loan estimate will offer a line-by-line breakdown that shows the terms of your home loan.

Prepare ahead of time and review this sample Loan Estimate. All lenders use the same format, so this will make it easier to compare refinance offers.

Step 4: Estimate the closing costs for a mortgage refinance.

Refinancing your mortgage is about saving money for most borrowers. So if your mortgage refinance has a lower rate but high closing costs, it might not be a great solution.

Check out your Loan Estimate again to verify closing costs and any other fees that might be negotiable. Closing costs will be written in a different section and cover one-time expenses.

When you refinance a mortgage, many borrowers have the option to pay closing costs up front, roll them into the loan, or get a lender credit in exchange for a higher rate. 

To find out which fees are negotiable, check out this sample Loan Estimate.

Closing costs typically include:

  • Origination Fee
  • Appraisal Fee
  • Credit Report Fee
  • Prepaid Homeowner’s Insurance
  • Prepaid Interest
  • Property Taxes
  • Mortgage Insurance

Remember these are one-time fees that you wouldn’t incur without refinancing your mortgage. One way to know whether refinancing your mortgage will save you money is to calculate your closing costs.

Related: The Truth About Closing Costs and No-Closing Cost Loans

Step 5: Lock your rate when you apply for refinancing.

Lenders vary in how and when they offer mortgage rate locks, so be sure to ask your mortgage advisor about the terms. Often, borrowers have the option to lock in a mortgage rate early in the application process.

A float-down option often allows rate flexibility that protects the borrower: if market rates drop, the borrower’s rate “floats down” with the market; but if rates rise, the quoted rate stays secure. Mortgage lenders typically offer rate locks for 30 to 60 days. 

Ask your mortgage lender about locking your rate and what happens if mortgage rates shift. If the refinance process takes longer than anticipated, you don’t want the uncertainty of a fluctuating mortgage rate in the mix.

Related: Your Complete Guide To Refinancing Your Mortgage

Final Takeaway

Refinancing a mortgage can help you reach your financial goals faster. Take a minute to clarify your goals to make an informed decision once you get a loan estimate from your lender. Keep your credit report in check, take a close look at closing costs, and lock your rate if possible. Most importantly, shop around for the right mortgage lender and make sure you’re comparing apples to apples when you evaluate the terms of your refinance.

Next Steps

To get the best refinance rates and loan terms, work with a local mortgage expert who understands your financial situation. We’d love to discuss your financial goals and build a custom mortgage refinance that saves you money. 

Smart Tips to Get Preapproved for a Mortgage (Before That Offer)

June 4, 2021
blog young couple on couch2

As soon as you start shopping for a new home, one of the most important steps you can take is to get pre-approved for your home loan. Getting pre-approved for a mortgage can boost your buying power and give you peace of mind while you shop.

Why? When you get pre-approved for a mortgage, the lender has already approved a maximum amount for your home loan. You won’t have to worry about whether or not you’ll get approved for a different amount, and you’ll have real buying power when you make an offer.

Follow these tips and learn how to get pre-approved for a mortgage fast. Once the mortgage pre-approval process is underway, you can hit those open houses with confidence.

Getting Pre-qualified vs. Pre-approved for a Mortgage

First things first, getting pre-qualified and getting pre-approved for a mortgage aren’t the same thing, and knowing the difference can give you an edge.

Pre-qualification seems like a simple process because it requires less documentation. 

To get pre-qualified, a lender will ask you for some basic information, including your credit score, current income, and employment status. A pre-qualification is helpful as an estimate for what you can afford, but it doesn’t guarantee that you’ll qualify for a home loan for that amount.

Pre-approval is a more thorough process, but the payoff for potential buyers is significant.

When you get pre-approved for a mortgage, the lender does the extra work to verify your credit and income, along with the required documentation for a home loan. Your mortgage advisor will discuss different loan options, current mortgage rates, and your budget. 

Once your mortgage is pre-approved, you’ll have a mortgage pre-approval letter that you can present with every offer. You’ll know the maximum amount you can borrow, and the sellers will know that you’re a serious buyer who can close fast.

A mortgage lender won’t finalize the loan terms until you’ve made an offer that the seller accepts. Once the new property is in escrow, the lender will complete the terms of your home loan and get paperwork ready for closing.

Related: The truth about closing costs and no-closing-cost loans

Top 5 Questions on Getting Pre-approved for a Mortgage (Answered)

1. Do I need to get pre-approved for a mortgage before I make an offer?

The short answer is no. There is no requirement to be pre-approved for a mortgage before you make an offer.

However, getting pre-approved for a mortgage is one of the best moves you can make if you want to make a competitive offer that stands out. In today’s housing market, your offer will be stronger if you have fewer contingencies. 

For example, let’s say you make an offer on a property, and there are five other offers. In this scenario, the sellers have a lot of options. There are exceptions to every situation, but most sellers (and realtors) will want buyers who can close fast with the fewest contingencies.

A mortgage pre-approval letter shows that you’re a serious buyer who is ready to close fast. It also assures the seller that you’ve been approved for a home loan that meets or exceeds the offer.

2. What documents will I need to get pre-approved?

Getting pre-approved for a mortgage is similar to starting an application for a home loan, with a few exceptions. Mortgage lenders require varying documentation depending on the type of home loan you want, but it’s a good idea to start gathering the basic financial information early.

  • Identification such as a passport or driver’s license
  • Employment verification
  • Proof of income (e.g., pay stubs, W-2 statements, bonuses, alimony)
  • Tax returns for the past two years 
  • Recent bank statements
  • Investment account statements

If you’re self-employed or plan to qualify using non-standard income, your advisor can talk with you about additional information that will be required.

3. Does getting pre-approved for a mortgage affect my credit score?

Probably not. In most cases, getting pre-approved for a mortgage won’t affect your credit score. During the process, your lender will pull your credit report to process your mortgage pre-approval. A single request typically won’t impact your credit.

However, some buyers decide to apply with multiple lenders to compare rates and loan options. This strategy can negatively impact your credit score since multiple lenders will trigger numerous credit inquiries.

Working with an experienced mortgage advisor can help protect your credit rating. A qualified mortgage advisor can pull your credit score just once and shop for the best rates and loan options from various lenders–without affecting your credit score.

Related: How to find an experienced mortgage advisor in your local area

4. How long will it take to get a mortgage pre-approval letter?

Typically, a qualified borrower can get a mortgage pre-approval letter in just a few days. Depending on your situation, it might take a bit longer, which is why it’s wise to start early.

Connect with an experienced mortgage advisor so you can make sure all your documentation is in order. If you have good credit and verifiable income, getting pre-approved for a mortgage is a quick process.

If you have a financial situation that is less common, getting pre-approved for a mortgage is even more important, so you aren’t faced with holdups when you’re ready to make an offer. A qualified mortgage advisor can keep things moving quickly.

5. What happens if my home loan doesn’t get approved?

Once you’ve made an offer on a new home, it can be stressful waiting to find out if your home loan is approved. Even worse, rushing to get your application pushed through only to get denied.

This is one reason it’s smart to get pre-approved for a mortgage before you find your perfect home. Getting pre-approved for a mortgage gives you confidence and stability.

By getting pre-approved early, your mortgage advisor can put together customized loan options that fit your financial situation. Even if your credit isn’t perfect, there are several loan options that could be a good fit. Especially if you’re a first-time homebuyer.

How to Get a Fast Mortgage Pre-approval


Step 1: Estimate how much you can afford

Use a mortgage calculator to find out how much you can afford. The results will only be a ballpark figure, but it can help set expectations. Decide on your price range, then connect with a mortgage advisor to discuss your homeownership goals.

Check out this mortgage calculator to see how much you can afford


Step 2: Connect with a Mortgage Advisor

First, talk to a mortgage advisor as soon as you’re thinking about getting a home loan. A qualified mortgage expert can start the mortgage pre-approval process right away while you start shopping for your next home.

Find a qualified mortgage expert in your local area


Step 3: Download your free credit report

You can download a free credit report once every 12 months. It’s a good idea to find out your credit score and check the report to see if any errors need attention. Your credit score will have a direct impact on the terms of your loan and your mortgage rate. By getting a free copy of your credit report early, you can resolve any errors ahead of time.

Click here to download your free credit report


Step 4: Gather required documentation

Most mortgage lenders require similar documentation, with a few exceptions. Start gathering paperwork you’ll need to verify income and assets, employment information, bank statements, and tax returns. If you’re self-employed or plan to use non-standard income to qualify, your mortgage advisor can talk with you about additional information that might be required.

Ask your mortgage advisor for a quick list to help keep things on track. An experienced mortgage advisor will provide a checklist to follow and will make sure the process runs smoothly.

Final Takeaway

Getting pre-approved for a mortgage means that your mortgage lender has already approved the total loan amount for your home loan. Getting pre-approved will help you stand out among other potential buyers and also lets sellers know you’re serious and you’ll be able to close fast.

Shopping with a mortgage pre-approval letter will give you peace of mind and a competitive edge when you decide to make an offer. Start the process early so your lender has all the required documentation and your mortgage advisor can keep things running on time.

Next Steps

If you’re thinking about buying a home, getting pre-approved for a mortgage will give you several advantages in today’s housing market. Start gathering your documentation and connect with a mortgage advisor to discuss your homeownership goals. Getting pre-approved is a straightforward process with big payoffs. We’d love to help.

Get Preapproved for a Mortgage Before You Make an Offer

July 13, 2022
mortgage blog, preapproved, mortgage

When you’re shopping for a new home, one of the most important steps you can take is to get pre-approved for your home loan. Getting pre-approved for a mortgage can boost your buying power and give you greater confidence when you make an offer.

Why? When you get pre-approved for a mortgage, the lender has already approved a maximum amount for your home loan. You won’t have to worry about whether or not your financing could fall through and you’ll have real buying power when you make an offer.

Follow these tips and learn how to get pre-approved for a mortgage fast. Once the mortgage pre-approval process is underway, you can hit those open houses with confidence.

 

Getting Pre-qualified vs. Pre-approved for a Mortgage

First things first, getting pre-qualified and getting pre-approved for a mortgage aren’t the same thing, and knowing the difference can give you an edge.

Pre-qualification seems like a simple process because it requires less documentation. 

To get pre-qualified, a lender will ask you for some basic information, including your credit score, current income, and employment status. A pre-qualification is helpful as an estimate of what you can afford, but it doesn’t guarantee that you’ll qualify for a home loan for that amount.

Pre-approval is a more thorough process, but the payoff for potential buyers is significant.

When you get pre-approved for a mortgage, the lender does the extra work to verify your credit and income, along with the required documentation for a home loan. Your mortgage advisor will discuss different loan options, current mortgage rates, and your budget. 

Once your mortgage is pre-approved, you’ll have a mortgage pre-approval letter that you can present with every offer. You’ll know the maximum amount you can borrow, and the sellers will know that you’re a serious buyer who can close fast.

A mortgage lender won’t finalize the loan terms until you’ve made an offer that the seller accepts. Once the new property is in escrow, the lender will complete the terms of your home loan and get the paperwork ready for closing.

Related: The truth about closing costs and no-closing-cost loans

Top 5 Questions on Getting Pre-approved for a Mortgage

1. Do I need to get pre-approved for a mortgage before I make an offer?

The short answer is no. There is no requirement to be pre-approved for a mortgage before you make an offer.

However, getting pre-approved for a mortgage is one of the best moves you can make if you want to make a competitive offer that stands out. In today’s housing market, your offer will be stronger if you have fewer contingencies. 

For example, let’s say you make an offer on a property, and there are five other offers. In this scenario, the sellers have a lot of options. There are exceptions to every situation, but most sellers (and realtors) will want buyers who can close fast with the fewest contingencies.

A mortgage pre-approval letter shows that you’re a serious buyer who is ready to close fast. It also assures the seller that you’ve been approved for a home loan that meets or exceeds the offer.

2. What documents will I need to get pre-approved?

Getting pre-approved for a mortgage is similar to starting an application for a home loan, with a few exceptions. Mortgage lenders require varying documentation depending on the type of home loan you want, but it’s a good idea to start gathering the basic financial information early.

  • Identification such as a passport or driver’s license
  • Employment verification
  • Proof of income (e.g., pay stubs, W-2 statements, bonuses, alimony)
  • Tax returns for the past two years 
  • Recent bank statements
  • Investment account statements

If you’re self-employed or plan to qualify using non-standard income, your advisor can talk with you about additional information that will be required.

3. Does getting pre-approved for a mortgage affect my credit score?

Probably not. In most cases, getting pre-approved for a mortgage won’t affect your credit score. During the process, your lender will pull your credit report to process your mortgage pre-approval. A single request typically won’t impact your credit.

However, some buyers decide to apply with multiple lenders to compare rates and loan options. This strategy can negatively impact your credit score since multiple lenders will trigger numerous credit inquiries.

Working with an experienced mortgage advisor can help protect your credit rating. A qualified mortgage advisor can pull your credit score just once and shop for the best rates and loan options from various lenders–without affecting your credit score.

Related: How to find a experienced mortgage advisor in your area

4. How long will it take to get a mortgage pre-approval letter?

Typically, a qualified borrower can get a mortgage pre-approval letter in just a few days. Depending on your situation, it might take a bit longer, which is why it’s wise to start early.

Connect with an experienced mortgage advisor so you can make sure all your documentation is in order. If you have good credit and verifiable income, getting pre-approved for a mortgage is a quick process.

If you have a financial situation that is less common, getting pre-approved for a mortgage is even more important, so you aren’t faced with holdups when you’re ready to make an offer. A qualified mortgage advisor can keep things moving quickly.

5. What happens if my home loan doesn’t get approved?

Once you’ve made an offer on a new home, it can be stressful waiting to find out if your home loan is approved. Even worse, rushing to get your application pushed through only to get denied.

This is one reason it’s smart to get pre-approved for a mortgage before you find your perfect home. Getting pre-approved for a mortgage gives you confidence and stability.

By getting pre-approved early, your mortgage advisor can put together customized loan options that fit your financial situation. Even if your credit isn’t perfect, there are several loan options that could be a good fit. Especially if you’re a first-time homebuyer.

 

How to Get a Fast Mortgage Pre-approval


Step 1: Estimate how much you can afford

Use a mortgage calculator to find out how much you can afford. The results will only be a ballpark figure, but it can help set expectations. Decide on your price range, then connect with a mortgage advisor to discuss your homeownership goals.

Check out this mortgage calculator to see how much you can afford


Step 2: Connect with a Mortgage Advisor

First, talk to a mortgage advisor as soon as you’re thinking about getting a home loan. A qualified mortgage expert can start the mortgage pre-approval process right away while you start shopping for your next home.

Find a qualified mortgage expert in your area


Step 3: Download your free credit report

You can download a free credit report once every 12 months. It’s a good idea to find out your credit score and check the report to see if any errors need attention. Your credit score will have a direct impact on the terms of your loan and your mortgage rate. By getting a free copy of your credit report early, you can resolve any errors ahead of time.

Click here to download your free credit report


Step 4: Gather required documentation

Most mortgage lenders require similar documentation, with a few exceptions. Start gathering paperwork you’ll need to verify income and assets, employment information, bank statements, and tax returns. If you’re self-employed or plan to use non-standard income to qualify, your mortgage advisor can talk with you about additional information that might be required.

Ask your mortgage advisor for a quick list to help keep things on track. An experienced mortgage advisor will provide a checklist to follow and will make sure the process runs smoothly.

Summary

Getting pre-approved for a mortgage means that your mortgage lender has already approved the total loan amount for your home loan. Getting pre-approved will help you stand out among other potential buyers and also lets sellers know you’re serious and you’ll be able to close fast.

Shopping with a mortgage pre-approval letter will give you peace of mind and a competitive edge when you decide to make an offer. Start the process early so your lender has all the required documentation and your mortgage advisor can keep things running on time.

Taking Action

If you’re thinking about buying a home, getting pre-approved for a mortgage will give you several advantages in today’s housing market. Start gathering your documentation and connect with a mortgage advisor to discuss your homeownership goals. Getting pre-approved is a straightforward process with big payoffs. We’d love to help.

Relocating? Get Pre-approved for a Mortgage First

October 12, 2022
mortgage blog, pre-approved mortgage, preferred rate

When you’re relocating, shopping for a new home can be exciting but it can also feel overwhelming. One of the most important steps you can take is to get pre-approved for your home loan–even if you’re moving out of state. An experienced mortgage advisor can help you get pre-approved for a mortgage before you move in the zip code you need.

The best part is you’ll know exactly how much you can afford before you shop and you can lock in the lowest mortgage rate available. Getting pre-approved for a mortgage can boost your buying power and give you greater confidence when you’re ready to make an offer.

When you get pre-approved for a mortgage, the lender has already approved a maximum amount for your home loan. You won’t have to worry about whether or not your financing could fall through and you’ll have real buying power when you make an offer.

First, find a local mortgage advisor ahead of time who can help guide you through the process. No matter what state you’re about to call home, a qualified advisor can lock in your rate and partner with you through every step.

These tips and learn how to get pre-approved for a mortgage fast. Once the mortgage pre-approval process is underway, you can hit those open houses with confidence.

Getting Pre-qualified vs. Pre-approved for a Mortgage

First things first, getting pre-qualified and getting pre-approved for a mortgage aren’t the same thing, and knowing the difference can give you an edge.

Pre-qualification seems like a simple process because it requires less documentation. 

To get pre-qualified, a lender will ask you for some basic information, including your credit score, current income, and employment status. A pre-qualification is helpful as an estimate of what you can afford, but it doesn’t guarantee that you’ll qualify for a home loan for that amount.

Pre-approval is a more thorough process, but the payoff for potential buyers is significant.

When you get pre-approved for a mortgage, the lender does the extra work to verify your credit and income, along with the required documentation for a home loan. Your mortgage advisor will discuss different loan options, current mortgage rates, and your budget. 

Once your mortgage is pre-approved, you’ll have a mortgage pre-approval letter that you can present with every offer. You’ll know the maximum amount you can borrow, and the sellers will know that you’re a serious buyer who can close fast.

A mortgage lender won’t finalize the loan terms until you’ve made an offer that the seller accepts. Once the new property is in escrow, the lender will complete the terms of your home loan and get the paperwork ready for closing.

Related: The truth about closing costs and no-closing-cost loans

Top 5 Questions on Getting Pre-approved for a Mortgage

1. Do I need to get pre-approved for a mortgage before I make an offer?

The short answer is no. There is no requirement to be pre-approved for a mortgage before you make an offer.

However, getting pre-approved for a mortgage is one of the best moves you can make if you want to make a competitive offer that stands out. In today’s housing market, your offer will be stronger if you have fewer contingencies. 

For example, let’s say you make an offer on a property, and there are five other offers. In this scenario, the sellers have a lot of options. There are exceptions to every situation, but most sellers (and realtors) will want buyers who can close fast with the fewest contingencies.

A mortgage pre-approval letter shows that you’re a serious buyer who is ready to close fast. It also assures the seller that you’ve been approved for a home loan that meets or exceeds the offer.

2. What documents will I need to get pre-approved?

Getting pre-approved for a mortgage is similar to starting an application for a home loan, with a few exceptions. Mortgage lenders require varying documentation depending on the type of home loan you want, but it’s a good idea to start gathering the basic financial information early.

  • Identification such as a passport or driver’s license
  • Employment verification
  • Proof of income (e.g., pay stubs, W-2 statements, bonuses, alimony)
  • Tax returns for the past two years 
  • Recent bank statements
  • Investment account statements

If you’re self-employed or plan to qualify using non-standard income, your advisor can talk with you about additional information that will be required.

3. Does getting pre-approved for a mortgage affect my credit score?

Probably not. In most cases, getting pre-approved for a mortgage won’t affect your credit score. During the process, your lender will pull your credit report to process your mortgage pre-approval. A single request typically won’t impact your credit.

However, some buyers decide to apply with multiple lenders to compare rates and loan options. This strategy can negatively impact your credit score since multiple lenders will trigger numerous credit inquiries.

Working with an experienced mortgage advisor can help protect your credit rating. A qualified mortgage advisor can pull your credit score just once and shop for the best rates and loan options from various lenders–without affecting your credit score.

Related: How to find a experienced mortgage advisor in your area

4. How long will it take to get a mortgage pre-approval letter?

Typically, a qualified borrower can get a mortgage pre-approval letter in just a few days. Depending on your situation, it might take a bit longer, which is why it’s wise to start early.

Connect with an experienced mortgage advisor so you can make sure all your documentation is in order. If you have good credit and verifiable income, getting pre-approved for a mortgage is a quick process.

If you have a financial situation that is less common, getting pre-approved for a mortgage is even more important, so you aren’t faced with holdups when you’re ready to make an offer. A qualified mortgage advisor can keep things moving quickly.

5. What happens if my home loan doesn’t get approved?

Once you’ve made an offer on a new home, it can be stressful waiting to find out if your home loan is approved. Even worse, rushing to get your application pushed through only to get denied.

This is one reason it’s smart to get pre-approved for a mortgage before you find your perfect home. Getting pre-approved for a mortgage gives you confidence and stability.

By getting pre-approved early, your mortgage advisor can put together customized loan options that fit your financial situation. Even if your credit isn’t perfect, there are several loan options that could be a good fit. Especially if you’re a first-time homebuyer.

 

How to Get a Fast Mortgage Pre-approval


Step 1: Estimate how much you can afford

Use a mortgage calculator to find out how much you can afford. The results will only be a ballpark figure, but it can help set expectations. Decide on your price range, then connect with a mortgage advisor to discuss your homeownership goals.

Check out this mortgage calculator to see how much you can afford


Step 2: Connect with a Mortgage Advisor

First, talk to a mortgage advisor as soon as you’re thinking about getting a home loan. A qualified mortgage expert can start the mortgage pre-approval process right away while you start shopping for your next home.

Find a qualified mortgage expert in your area


Step 3: Download your free credit report

You can download a free credit report once every 12 months. It’s a good idea to find out your credit score and check the report to see if any errors need attention. Your credit score will have a direct impact on the terms of your loan and your mortgage rate. By getting a free copy of your credit report early, you can resolve any errors ahead of time.

Click here to download your free credit report


Step 4: Gather required documentation

Most mortgage lenders require similar documentation, with a few exceptions. Start gathering paperwork you’ll need to verify income and assets, employment information, bank statements, and tax returns. If you’re self-employed or plan to use non-standard income to qualify, your mortgage advisor can talk with you about additional information that might be required.

Ask your mortgage advisor for a quick list to help keep things on track. An experienced mortgage advisor will provide a checklist to follow and will make sure the process runs smoothly.

Summary

Getting pre-approved for a mortgage means that your mortgage lender has already approved the total loan amount for your home loan. Getting pre-approved will help you stand out among other potential buyers and also lets sellers know you’re serious and you’ll be able to close fast.

Shopping with a mortgage pre-approval letter will give you peace of mind and a competitive edge when you decide to make an offer. Start the process early so your lender has all the required documentation and your mortgage advisor can keep things running on time.

Taking Action

If you’re thinking about buying a home, getting pre-approved for a mortgage will give you several advantages in today’s housing market. Start gathering your documentation and connect with a mortgage advisor to discuss your homeownership goals. Getting pre-approved is a straightforward process with big payoffs. We’d love to help.

The Truth About Closing Costs and No-Closing-Cost Loans

April 22, 2021
blog young couple on couch

Each time you refinance your mortgage or purchase a new home, closing costs will be an inevitable part of the transaction. Depending on the amount, this can be an unwelcome surprise to new homeowners. The good news is that you have options. A great mortgage advisor can help explain the benefits and drawbacks unique to your situation. Even better, you can secure a custom home loan that covers your closing fees and meet your financial goals sooner.

The truth is, you get to decide how your home loan is structured. There are some tradeoffs to consider: You can choose to pay more points upfront and lower your interest rate, or you can increase your down payment for better long-term rates. You can also roll your closing costs into your mortgage or pay the costs out of pocket.

What are My Options When it Comes to Closing Costs?

With so many variables, it makes sense to look at a few alternatives:

  • Pay closing costs out of pocket
  • Roll closing costs into your loan
  • Negotiate with the seller to cover partial fees
  • Agree to have the lender cover closing costs in exchange for a slightly higher rate

Mortgage interest rates are still low enough that it’s worth considering.

The bottom line is that every new mortgage and refinance will have closing costs, but you have a few options about how you decide to pay them.

What Do Closing Costs Include and How Much Will I Have to Pay?

Closing costs are one-time fees and expenses a homeowner pays when you close on a new home purchase or refinance your mortgage. It’s the final chunk of money required after you’ve covered your down payment.

Closing costs run anywhere from 2-5% of the home loan amount and typically include title insurance, appraisal fees, property taxes, loan origination fees, and more.

It’s common for the buyer and seller to negotiate some of these costs in the final purchase contract. Often the buyer will pay most of the closing costs, and the seller will cover some of them, but this isn’t always the case.

In some situations, the buyer will pay the full amount, especially if the property is in high demand with multiple offers.

If you’d like a detailed behind-the-scenes look at closing costs, go here to check out the breakdown of loan-related fees and mortgage insurance costs that your mortgage could include.

What Happens When a Lender Covers the Closing Costs?

With a no-closing-cost mortgage, this typically means that your lender will cover most or all of your closing costs upfront. For the lender, this is a profitable alternative since the closing costs are a set amount. By charging a slightly higher mortgage interest rate in exchange, the lender will have a higher return over the life of the loan.

Depending on your situation, this might be a great choice to consider as a new homeowner facing closing costs. Less out-of-pocket expenses mean you might be able to become a homeowner sooner. As a homeowner, you’ll be able to start building equity right away, take advantage of tax breaks, and have the option to refinance in the future.

What Happens When I Roll Closing Costs into my Mortgage?

Folding the closing costs of your mortgage into your new home loan is different than having the lender cover the closing costs. When you roll your closing costs into your mortgage, it doesn’t necessarily raise your interest rate. Instead, the amount of your home loan increases by the value of your closing costs.

For example, if your purchase price is $350,000 and you put a down payment of $35,000 (10%), your starting mortgage would be $315,000. If the closing costs for your new mortgage are $10,500 (3%), your lender can roll it into your mortgage so that your home loan would be $325,100.

Rolling your closing costs into your mortgage might change your monthly payment by only a nominal amount, making it an attractive option for new homeowners short on cash. Just remember that you’ll be paying off that $10,500 with interest over the life of the loan, which in some cases might be 30 years.

What Happens If I Can’t Afford the Closing Costs?

Adding the closing costs to the home loan might cause the loan amount to jump beyond the approved loan amount in certain circumstances. In other situations, a borrower might not have the funds to cover closing costs for various reasons and might qualify for a government grant.

Borrowers with low-to-moderate income can apply for grants to help with closing costs through HUD-approved housing agencies. If you think you might qualify, give us a call. We can connect you with some information that might help.

Final Takeaway

Every home purchase and refinance will incur closing costs. If you don’t want to pay out of pocket, schedule a time to talk with your mortgage advisor about possible options:

  • no-closing-cost mortgages
  • lender credits or rebates
  • lender-paid closing costs
  • zero-cost or no-cost mortgages

What’s Next

Working with an expert mortgage advisor makes all the difference when it comes to managing your closing costs on a new home purchase or refinancing your mortgage. If you’d like to understand more about your options, give us a call. We can help.