MortgageRates are likely to continue to be volatile as we head into the election in November. If you've been thinking about refinancing, or looking at buying a home, we should talk soon.
I'm here when you're ready.Ben Yost 303-587-4297call or Text
Complete answer: Credit score is one of the most misunderstood topics about getting a mortgage. Many people believe that you have to have perfect credit and high scores to qualify. While having a higher score may help you obtain a slightly better interest rate, it is usually possible to get a mortgage with less than perfect credit.
Rather than try to tell you everything you need to know about credit here, I'd like to offer you a free, no obligation conversation to discuss your credit. We can talk about what your score is now (and how the score used to qualify for a mortgage is different than the scores you may get through credit card company monitoring or websites like Credit Karma), how it will affect your ability to get a mortgage, and more.
If during our conversation we discover that it's not the right time to get a mortgage, I can also help you take the steps necessary to improve your score.
If you've been wanting to look into buying a home, but are afraid your credit score isn't high enough, let's find out for sure together. Remember, it's no obligation, totally free, and you have nothing to lose.
โThose mortgage commercials on Colorado Media outlets make it look so easy... just download an app, push a button, and you're all set.
The problem is, you know nothing is ever that easy.
Who's going to answer your questions... help you get a low rate... make sure you've taken advantage of any special programs available to you... all of this and more?
As a local mortgage professional, I'm available to talk when it's convenient for you, not just during "business" hours. You won't get a different person every time you call, instead I'll know your unique situation and how to help you get the most house for your money. You'll be able to text me like we're besties, email me if that's what you prefer, call me to talk payment, or even to meet face-to-face if you like.
Don't worry, I have lots of technology at my fingertips, so I'll make the process convenient... but I'll still give you the personal attention that will let you sleep at night knowing someone is looking out for you and making sure everything goes according to plan.
The best part is my clients usually get a better rate working with me than they would have working with the big banks or "just a number" online lenders.
Give me a call, text, or email today so we can find out what mortgage works best for you.
I look forward to talking soon! BenYost Mortgage Lender 303-587-4297
Recap of last week: Rates were slightly better Average mortgage rates among lenders improved slightly last week compared to the week before, helped by the Fed's bond purchase program and a stable mortgage bond market.
Mortgage Rate Forecast: Rates likely to remain low Mortgage rates should remain stable, meaning we could see small movements up or down but are not likely to see a large move either way. For some borrowers rates will remain the same but may have higher closing costs or points. If you're looking at closing soon, be sure to discuss your unique situation with your mortgage professional to decide if now is a good time for you to lock in your rate.
What's affecting rates this week: - The Fed: Holding its Federal Open Market Committee meeting, will release a statement on Wednesday but is not expected to raise or lower rates. Continued bond buying is keeping rates low. - Forbearance requests: Borrowers requesting forbearance from mortgage payments are causing issues among mortgage servicers, pressuring rates higher. If you're considering forbearance, talk to a mortgage professional first to fully understand the pros and cons. - Economic data: Although there's more data this week, it's not likely to cause much movement in rates
To some people it sounds crazy, but for many others who have moved across the country or move frequently (like a military family) it is commonplace. But now that the COVID-19 pandemic has turned the home buying process on it’s head, you may be looking at making this decision yourself.
Here are 3 tips for buying a home you haven’t visited in person
1) Start with the right agent. The real estate agent will be your eyes and ears, and in most cases can still go and tour a home for you. With Zoom, FaceTime or other equivalent, your agent may be able to take you through the home with a live tour. If not, they can take lots of pictures and video, and know what to look for to help you make an informed decision on if you want to make an offer.
2) Consider asking the seller for a home warranty that covers most large appliances, plumping, electrical, HVAC and any other large home systems for peace of mind. Your agent can advise you on how to do this.
3) Get a home inspection. Ask your agent to suggest a qualified home inspector, preferably one that deals with sight unseen sales. Ask for pictures and/or video as well as the written report. I can still help you buy a home, even sight unseen. Contact me today for more information on why now is such a great time to buy and how I can help!
Recap of last week: Rates were slightly improved On average, mortgage rates improved last week, with some borrowers seeing slightly better rates while others just saw better closing cost rebate pricing. Rates were helped by Fed quantitative easing, and were more stable than weeks past.
Mortgage Rate Forecast: Rates likely to be unchanged or slightly worse Mortgage rates could be pushed slightly higher this week, pressured by market conditions making it harder to securitize and service mortgages after they have been originated and processed. Rates will still remain low though, and anyone considering buying a home or refinancing should talk about their unique situation with a mortgage professional for better guidance.
What’s affecting rates this week:
The Fed: Fed bond buying (called quantitative easing) is helping to stabilize rates and is keeping rates low.
Forbearance requests: Borrowers requesting forbearance from mortgage payments are causing liquidity concern among mortgage servicers, pressuring rates higher. If you’re considering forbearance, talk to a mortgage professional first to fully understand the pros and cons.
COVID-19: Concerns over the economic fallout of the crisis continue to help keep rates low.
5.00ย Mortgage Review completed onย ย March 26, 2017
Reviewed by Jeffrey G,ย
Completed transaction in February 2017 in Centennial, CO.
Ben’s honesty and his knowledge of the mortgage industry was very helpful when my wife and I purchased our home. I would recommend Ben to anyone who is looking for a home!
What is PMI and Why Do I Need it on my Colorado Mortgage Loan? Short answer – your not putting 20% down on a conventional Colorado home Loan. So, the banks to offset the risk of a low down loan, make you get insurance. This private mortgage insurance (PMI) insures the lender for the amount- up to 20% down that you didn’t put down.
Example: You put 5% down on the home your buying in Denver Colorado. You then have to get insurance for the other 15% that is left.
Doesn’t matter what loan you get: VA- has a funding fee; FHA – has MIP and Conventional loans have PMI.
Bottom Line if you don’t put 20% down you will most likely have to pay- MIP.
Also check out: https://www.bankrate.com/finance/mortgages/the-basics-of-private-mortgage-insurance-pmi.aspx
How Do Mortgage Lenders Decide If Youโre Creditworthy?
Itโs complicated, but this breakdown of the loan process is easy.
By Ann Brenoff
Ben Yost Agrees: Applying for a mortgage is arguably everyoneโs least-favorite and least-understood part of the home-buying process. Nobody enjoys assembling the mountain of paperwork required for a loan application.
But 90 percent of us need a mortgage loan to buy a house. So it behooves us to learn what prospective lenders really want to see in all the pay stubs and bank records they ask for. How do they decide who gets a loan?
What matters the most?
Hereโs a short guide to how lenders judge your mortgageability. Income vs. Housing Expenses
Lenders donโt want your total monthly housing expense,ย or MHE, to exceed a certain percentage of your gross income. Your MHE consists of the mortgage payment, property taxes, homeownerโs insurance and any homeowners association fee. The lender determines what the cutoff percentage will be.
Most stick pretty close to the traditionalย maximum of 28 percent of your gross income, but not always, according to Steve OโConnor, a senior vice president at the Mortgage Bankers Association.
โThere is quite a bit of variation among lenders, and each borrowerโs unique circumstances are taken into account,โ OโConnor said. Lenders may be willing to accept an MHE above 28 percent if there are compensating factors, such as a high credit score, a large down payment and low non-housing debt.
Wells Fargo makes several suggestions if you exceed that 28 percent mark, including increasing your down payment, looking for a less expensive home and considering an area with lower property taxes.
But still, you may be wondering why the lender gets to decide what percentage of your hard-earned money you should be spending on housing? Maybe youโre willing to sacrifice eating out and forgo buying a new car so that more of your income can go toward that new house.
Why should it matter to the lender?
Well,ย because lenders would really like you to be able to repay the loan. Andย federal guidelinesย warn that a household paying more than 30 percent of its gross income on housing and utilities should be consideredย โrent-burdened,โ according to the U.S. Department of Housing and Urban Development. If more than half of your income is spent on rent,ย you are considered โextremely rent-burdened.โ
What does this 28 percent actually look like in determining how much money you can borrow? The website Mortgage Professorย gives this example: If your monthly gross income is $4,000, your housing expenses canโt exceed $1,120. Deduct estimated property taxes of $261 and insurance of $103, and you will be left with a maximum mortgage payment ofย $756 under the 28 percent rule. With a 4 percent 30-year fixed rate mortgage, $756 will support a loan amount of $158,353. With 5 percent down, this suggests that you can afford a home with a maximum sale price of $166,687.
But What Actually Counts As Income?
Lenders also have some thoughts on what qualifies as income.ย You will need to show them pay stubs, of course, but they will also be looking at the type of work you do, how long youโve been employed and what opportunities you have for advancement.
Good for you if youโve been working a part-time second job to save up for a down payment, but some lenders wonโt consider that money as income unless youโve had the job for 12 to 24 consecutive months. Any commissions, bonuses or overtime pay will also usually be ignored unless theyโve been steady for two years and your employer verifies that theyโre likely to continue.
If you want to count alimony or child support as income, you better have received it for the previous 12 months and know that it will continue for the next three years.
Lenders will want to see a divorce decree and court records to verify on-time payments. Yes, your ex has to pay on time or you might not get a mortgage.
Should your income stem from a trust fund, interest or dividends, youโll likely need to show proof of those moneys for the previous 12 months.
In what many millennials find to be a real kick in the pants, you generallyย canโt count potential rental income from a roommateย in your primary residence.
The only accepted source of rental income is from an investment property. Even then, most lenders will consider only 75 percent of the monthly rent and then subtract ownership expenses, as verified by Schedule E of your tax returns.
Are you self-employed? It may feel like lenders hate you. They donโt, but they will be super-cautious.ย You need to have been self-employed for at least two years, and lenders will likely take the average of your monthly adjusted gross income.ย Self-employed borrowers often struggle qualifying for a mortgage because they write off a lot of expenses on their income tax filings, thereby reducing their adjusted gross income.
Some lenders of late are starting to show the self-employed a little more love by requiring only one year of documentation instead of two and lightening the strict controls.
Income vs. Existing Debt
lender will also consider what other debt youโre already carrying. Student loans, credit cards, automobile debt and money you have borrowed for any other reason are all weighed against your gross income. So if you know that youโll be applying for a mortgage soon, donโt go out and buy a car on borrowed money. And donโt charge new furniture before you buy the house you hope to furnish.
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While the portion of your income that you spend on housing shouldnโt exceed 41ย percent of gross income, your total debt service โ including housing โ shouldnโt exceed 45 percent. Combined, this is known as the 36/45 ruleย and is used by mortgage lenders and other creditors to assess your borrowing capacity.
The argument is that any expense and debt burden in excess of the 36/45ย yardstick would be difficult for most individuals or households to handle and could lead to default.
So in real numbers, what does this 41 percent cutoff look like? If you pay $1,300 a month for housing and another $300 for a car lease and $400 for the rest of your debts, your total monthly debt payment is $2,000. If your gross monthly income is $6,000, then your debt-to-income ratio is 33 percent.
Congrats! You came in under!
But what if your ratio is above 36 percent? Before applying for a mortgage, make some adjustments,ย advises mortgage columnist and author Jack M. Guttentag, professor emeritus at the University of Pennsylvaniaโs Wharton School. For instance, if you were planning to make a larger down payment than the absolute minimum required, consider using that cash instead to reduce your debt โ like paying off a credit card or car loan.
โJust make sure that when you reduce your down payment you arenโt going to be pushed into a higher mortgage insurance premium category, which could offset most of the benefit,โ Guttentag wrote at Mortgage Professor.
And talk these things out with your mortgage broker, OโConnor said. Different types of debt may factor into the lenderโs decision in different ways. For example, a borrower may have student loans that are scheduled to be forgiven in the near future โ good โ or adjustable-rate loans that are scheduled to reset in the near future โ possibly not so good.
โThese varying repayment schedules will influence the borrowerโs overall debt burden, and therefore influence the borrowerโs capacity to repay the mortgage,โ OโConnor said.
Besides income and debt, lenders also consider such other factors as credit history, cash reserves and collateral (the value of mortgaged property) when making mortgage decisions. A Show Them The Money
Lenders want to know that the borrower has sufficient cash to meet the down payment and other settlement costs that show up in the escrow process. Wannabe borrowers who lack sufficient cash are consideredย โcash constrained.โย They have two choices: reduce the amount of the down payment, if possible, or find a way to cough up more money โ asking a parent for help, for instance.
But there are rules to that as well.
The down payment gift rulesย are as follows: The gift must be documented with a formal โgift letter,โ there must be a paper trail for the money as it goes from the giverโs account to the homebuyerโs account, and the gift canโt be a loan-in-disguise. Buyers can accept up to 6 percent of a homeโs purchase price in the form of a cash gift to cover the down payment.
U.S. buyers like to put at least 20 percent down because that likely qualifies them for the lowest mortgage rates available. Plus, with 20 percent down, no private mortgage insurance is required. But very few first-time buyers can actually muster that much.
ย
The National Association of Realtors saysย 81 percent of Americansย purchase their first home with less than 20 percent down. Put another way, only 19 percent of us manage to accumulate what has, for some reason, remained the standard mark for a down payment.
Aย recent study by Attom Data Solutionsย found that 22.8 percent of all purchase loan originations on single-family homes in the second quarter of 2017 involved co-borrowers listed on the mortgage or deed of trust โ an increase from 20.5 percent during the same period in 2016.ย That would often be the Bank of Mom and Dad helping out.
P.S. The Best Advice On Mortgages
This example comes from Mortgage Reportโs First-Time Home Buyersโ Guide: You want to buy a house for $250,000 with 10 percent down ($25,000). Youโve determined that you can affordย $1,100 a month for your mortgage, including principal and interest. If your mortgage rate is 3.75 percent, the payment will beย $1,043, which is within your budget. But if the best loan you can get has a rate of 4.25 percent, the payment will beย $1,107 โ and thatโs out of budget.
Itโs the same house โ affordable under one loan, not affordable under another.
And those are just two loan options. Mortgage rates are like shifting sands. They go up and down all day.
So the best advice we can offer is this: Shop mortgage rates, not housing prices.
Ben Yost Says that most of the loans I see use 3-5% down to get into a home!
