Understanding the buying process
Applying for a Florida Mortgage
The steps to getting a mortgage are relatively straightforward once you get past all of the legal-jargon and bank talk. You will still need to understand what you are doing of course and we are here to assist you in comprehending the mumbo-jumbo before you put pen to paper and sign on the dotted line.
Under the Ability to Repay Rule
Prior to 2010, lenders more often allowed mortgage loans to consumers who could not truly afford them. Under the Ability-to-Repay rule, all new mortgage loans must meet the basic requirements that will help prevent consumers from taking on loans that they cannot truly afford. This is to benefit both the consumer and the lender. Some of the features of the new rule are:
:: All financial information has to be supplied and verified: Lenders must review and verify a consumer's financial information. A lender must document and verify: a borrower's employment status; income and assets; current debt obligations; credit history; monthly payments on the mortgage; monthly payments on any other mortgages on the same property; and monthly payments for mortgage-related obligations. This rule has put a stop to all no-doc, low-doc loans, in which lenders are forced to underwrite better and more responsible mortgage loans. Hence hoping to lower the risk of foreclosure, bankruptcy or other negative debt or credit impacts on the consumer.
:: All borrowers have to have sufficient assets or income to pay back the loan: Lenders must verify, evaluate and conclude that the borrower has the ability to repay the loan. As an example; Lenders may calculate the consumer's debt-to-income ratio. This is their total monthly debt divided by their total monthly gross income. Verifying how much income a consumer has and is expected to have, and knowing how much currently owe, helps a lender determine how much more debt a consumer afford.
:: Teaser rates can no longer mask the true cost of a mortgage: Lenders must calculate the consumer's ability to repay on both the principal and the interest over the long term - not just during an introductory period when the rate may be lower.
There are essentially four steps involved in obtaining a mortgage loan:
Step one: Fact finding and pre-approval process
- How much do you earn?
- How much are your outgoings?
- How good is your credit?
- How much can you pay each month?
You will authorize us to run your credit score and report
We will walk you through a number of scenarios by asking some simple and straightforward questions and from this will be able to give you an approximation of how much you can afford and with what types of loan options are available for you. Once this is completed we will provide you with a letter of pre-approval which is great bargaining clout when negotiating the purchase of a home as it states in black and white that you are able to financially afford the property.
Step two: complete a pre-qualification
The pre-qualification process determines how much you can borrow for a new purchase or refinance on the home in which you are considering. You will need to supply the following details:
- Details of your current job/employment
- Your residence history - owned & rented
- Total assets and liabilities
- Details about the property you are refinancing or a copy of your fully executed purchase and sales contract for the new home you are to purchase.
Once this is completed we will run DU* this is a pre underwriting gauge that helps guide us to get any other addition information that the underwriter may be looking for you specific situation.
Step three: Submission to Underwriting
Once we have completed the bulk of the standard paperwork your file will be submitted to the underwriter for review and conditional approval. Yes conditional approval. I believe in waiting until your file comes back from the underwriting to see the conditions for approval before ordering an appraisal and survey. Once we see the conditions and we are fairly confident that we can satisfy the conditions we will than order the appraisal and survey. Remember appraisals and surveys are paid by you the applicant whether you close on the loan or not.
Step four: Clear to close and funding
The last step is here, is to satisfy the conditions for closing outlined by the underwriter. Once all the satisfied conditions have been sent to the underwriter for final review and approval, the underwriter will send us and the closing attorney (title company) the CTC, Clear to Close.
Upon receipt of the CTC closing Documents will be ordered and coordinated with the closing attorney with a time for closing your purchase or refinanced mortgage loan.
* DU is Desktop Underwriting program of Fannie Mae, similar is Freddie Mac's LP and GUS from USDA. These automated programs give the mortgage broker or lender basic eligibility guidelines for that specific borrower. A report of Approved/Eligible with conditions is what the lender or mortgage broker is looking for. If we do not see this Approved/Eligible we need to find out why not and see what the potential borrower would need to correct or overcome in order to get an Approved/Eligible to continue working on the loan process.
Our service has been designed to remove the stress and misunderstandings commonly associated with buying a property.
For further information about getting the right mortgage for you and to arrange your 'NO-FEE ASSESSMENT'
CALL US on (+1) 941-921-1110