The Dreaded Blank Page

Having your bank account statements in order and avoiding the deposit traps will help assure a smooth mortgage application and approval process. Follow these simple steps and remember, if you have a question, just ask me!!

• Document the source and purpose of deposits not clearly identifiable as being from your employer. If a deposit does not match up with your pay-stub, we will need to show where it came from.                                                                    
• Make copies of all checks and deposit slips and keep them together in case they’re requested.
• Track transfers, too. We’ll need statements for both accounts involved. If it is a gift from a family member, please consult with us for the proper process to follow.
• Don’t deposit currency and checks together, as this will be hard to document. It’s best not to make cash deposits unless you can clearly document the source of the funds.

Following these steps will make it easy to prove that funds going into your account are not borrowed. Even private loans have corresponding payments, so underwriters have to be certain to account for all debts.

The Dreaded Blank Page of the Bank Statement

You may be tempted to throw away a numbered page on your statement if it is blank or contains an advertisement. Unfortunately, if the other pages are marked 5 of 8, 6 of 8, etc., the underwriter can’t be sure a missing page 8 of 8 had no important information.

To be sure there’s no delay in processing your loan application, please save and provide ALL numbered pages of your bank and other asset statements, even if they’re blank.

Your Down Payment and Reserves must be in an account

Mattress Money or any “cash on hand” is not acceptable. All funds must be “seasoned,” which means your money needs to be in an institutional account (bank, credit union, brokerage, etc.). You will need to provide all pages of up to three months of consecutive statements for proof these funds are yours.

Gift Funds are OK with a signed “gift letter” (a form we provide) and evidence of the donor’s ability (a statement showing sufficient funds). Later, we’ll need copies of the check, deposit slip and account statement to show the transfer into your account.

Assets Being Sold, such as a car, boat, collectible or anything of value you are selling, require proof of ownership (such as a registration or title) and evidence of value (blue book value or appraisal). After the sale, provide copies of the receipt and the check and deposit slip showing the transfer of funds to your account.

Other Examples include loans from employers or against retirement savings, grants, inheritances, proceeds of sale from other property, loan paybacks and winnings. Be prepared to show the source of funds, evidence of transfer into your account and any supporting documentation of value, terms, service provided, etc.

TIP: If you have time and want to minimize paperwork, consolidate all funds into one account at least two or three months prior to closing. Save any and all evidence of transfers and deposits and keep activity to a minimum.

Never hesitate to ask questions when you’re unsure about what will work and what will not.  Mortgage Guidelines are updated and changing constantly.

 

 

Bill Nickerson

You don’t have to worry about Owner Occupancy Rate!

Are you Buying or Selling a Condominium? 

Worried that you don’t meet the old rule of 50% owner occupancy rate? 

Worry no longer!!

As long as you purchasing your new condo with the intent to occupy this condo as your Primary Residence, Fannie Mae no longer requires a specific occupancy rate in order to obtain a mortgage on the property.  You can put down as little as 5% and in some cases even as low as 3% down payment. 

This rule still applies for FHA and for Mass Housing Loans, they both still require that the complex has 50% or greater of owners compared to renters. These are very important to know when shopping for a mortgage and a home.

Here is the fine print taken from the FNMA guidelines

For investment property transactions on attached units in established projects (including two- to four-unit projects), at least 50% of the total units in the project must be conveyed to principal residence or second home purchasers. This requirement does not apply if the subject mortgage is for a principal residence or second home. Financial institution-owned REO units that are for sale (not rented) are considered owner-occupied when calculating the 50% owner-occupancy ratio requirement.

Here is what Lenders are looking at

Condo Fees: No more than 15% of the total units in a project may be 60 days or more past due on their common expense assessments (also known as HOA dues). For example, a 100–unit project may not have more than 15 units that are 60 days or more past due.

10% Reserves: Lenders must review the HOA projected budget to determine that it provides for the funding of replacement reserves for capital expenditures and deferred maintenance that is at least 10% of the budget.

To determine whether the association has a minimum annual budgeted replacement reserve allocation of 10%, the lender must divide the annual budgeted replacement reserve allocation by the association’s annual budgeted assessment income (which includes regular common expense fees).

The traditional requirements and regulations still apply.  This link will take you directly to the Fannie Mae website of guidelines.

For more information about purchasing a Condo, Single or Multi Family,  feel free to call me at 978-273-3227 or email me.

Bill Nickerson

 

Still Writing Checks to the Landlord?

Home loan payments are now often less than rent payments!

If you don’t intend to stay in your home long, need extra mobility or are unsure about your employment prospects, renting probably makes good sense for you. But if you’re planning to stick around, owning may prove to be more rewarding. Here are five good reasons:

• Rates are near historic lows, and prices are still well below the past peaks. This unusual combination places the real cost of purchasing a home near a 50-year low.
• Buying builds equity. On most mortgage loans, you pay down the principal balance with each payment. This typically starts at about $100 per month for every $100,000 of loan balance and increases each month through the entire life of the loan. To make a fair comparison, be sure to subtract principal paid from a home loan payment vs. the cost of renting the same property.

• Home values rise over time. Increases are not guaranteed; however, if we use the last 50 years as a guide, values have typically risen at a pace above inflation.

• Homeownership often brings tax benefits. Deductions for home mortgage interest and real estate taxes save many homeowners thousands every year. Others still find taking the standard deduction more beneficial. Always consult your tax pro for advice.

• It’s more than just the money. Families become rooted in a neighborhood, school district and community. Homeowners have the freedom to choose paint colors and make modifications. Pets are welcomed. Intangibles like these often formulate the most valuable returns.

Housing is a precious commodity that we all need every day. It’s your choice to rent or to own, yet buying a home for yourself usually beats buying one for your landlord.

Looking for more information when it comes to Renting vs Owning?  Click here for a detailed breakdown. The true costs of Renting vs. Owning 

If you want to learn more or find out what you might be able to afford, reach out. We’re always happy to help.

Bill Nickerson | NMLS #4194 | Mortgage Financial | 10 Elm Street, Danvers MA  http://www.billnickerson.com  | bnickerson@mfsinc.com | 978-273-3227

Using Gift Funds for your Mortgage?

Getting Gift Funds for the purchase of your new home?  Whether the funds are for the down payment, reserves or even closing costs, here is what you need to know.

The “Donor” of the gift must be a family member, fiancé or domestic partner. They must prove they have the ability to provide you with the gift by providing a copy of their bank statement, a copy of the canceled gift check and/or a signed letter from their bank saying the funds are available.

The “Gift Letter” is a form we will provide. The donor will need to complete it with basic information and a signed statement that the funds are a gift with no expectation of repayment.

The “Transfer” must be documented carefully. Make a copy of the gift check and deposit slip or of confirmation of the wire transfer. Deposit the gift in the account you’re already using for verification of funds to close. DO NOT combine this deposit with any other incidental deposits. Provide either an online update or the next account statement to show that the deposit cleared into the account.

Some programs allow for the entire down payment to be in the form of a gift. Others may require that you have at least 3 or 5% of the purchase price from your own funds. As these rules can vary or change at any time, never hesitate to consult with us for the specifics as they relate to your transaction.

While the documentation requirements may seem excessive at times, please remember that the underwriters are simply following the rules to assure that your down payment is not borrowed and that any allowable gift funds are coming from acceptable sources.

Always call or email with any questions you may have.  The more information you have, the easier your purchase transaction will be.

Bill Nickerson

A Commitment Letter to shop for a home

As you know, lending guidelines are like the weather in New England. Wait 5 minutes and they could change! With that introduction, why would you bring your clients out to see homes without having a full commitment letter from the Lender? Not a Pre-Approval… Not a Pre-Qualification letter, but a full commitment letter from US to your Client.

With our Advance Approval, this gives you the security of knowing you have a commitment letter even before you start your search for a home.

Once your client has the necessary income and asset documentation, our in-house underwriters (yes, as in all loans are written and funded in our Tewksbury office) will issue a commitment letter within 48 hours.

With Mortgage Financials Advance Approval, this removes all the stress from the transaction, allowing your clients to focus on purchasing the home of their dreams.

No Surprises, No Last minute conditions.  As always, we can close loans in under 30 days!

Mortgage Financial | Senior Loan Officer | NMLS #4194 | Phone: (978) 273-3227 | bnickerson@mfsinc.com | http://www.mfsinc.com/bnickerson |

Bill Nickerson