Many people are surprised to learn that rates change on a daily and sometimes hourly basis. Interest rates fluctuate in response to changes in the financial markets. The bond market is generally a good indicator of the trend of interest rates, with higher bond rates usually producing higher mortgage rates.
The amount that you can borrow will depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are able to make. You may also be able to take advantage of special loan programs for first time buyers. Give us a call, and we can help you determine exactly how much you can afford.
There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. Cherry Creek Mortgage can help you evaluate your choices and help you make the most appropriate decision.
To qualify for the HECM for purchase, you must be age 62 or older, and your new home must be your primary residence, meaning that you will live in the home more than six months per year.
You must complete a required counseling session to ensure you understand the terms and obligations of a reverse mortgage, and you’ll complete a financial assessment to ensure you’re able to continue making payments for property taxes, homeowner’s insurance and maintaining your home.
Our loan officers are paid from the loan itself. Cherry Creek Mortgage has relationships with many investors so we are able to customize products to fit your needs. Since we have access to a multitude of products and investors, it gives us the ability to find you the right loan, not just any loan. Our loan officers work with your financial goals in mind and customize a package, program, or solution for you.
Down payment is determined by three factors: age of youngest borrower, purchase price of home, and current interest rate.
The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:
Earnest Money: The deposit that is supplied when you make an offer on the house
Down Payment: A percentage of the cost of the home that is due at settlement
Closing Costs: Costs associated with processing paperwork to purchase or refinance.
All new construction may require a Certificate of Occupancy (CO) once the home has been inspected and it’s determined to be move-in ready. FHA requires lenders to wait until the CO is issued before a loan application can be taken. The first step is to get a Pre-Approval letter from us prior to going into contract with the builder. Please make sure to get us in touch with the builder so we can verify everything needed in the contract.
Obligations under the HECM for Purchase are the same as the traditional HECM reverse mortgage. You must continue payments for property taxes, homeowner’s insurance, any homeowner’s association fees, and the cost for basic maintenances of the home, in order to avoid defaulting on the loan.
There are some aspects of the HECM for Purchase that differ from the traditional HECM reverse mortgage. Because reverse mortgages are meant to help seniors age in place, you must move into the new home within 60 days after closing, and the new home must become your primary residence.
You are ready to buy a home! After you receive your pre-approval, it’s very important to inform us of any changes to your financial picture or credit history as this could impact the amount or type of loan for which you’ll qualify once your loan is fully underwritten.
Mortgage insurance is generally required in one form or another when the down payment is less than 20%, and it protects the lender in the event of loan default. The lower the down payment, the higher the risk for the lender, and thus the higher the monthly mortgage insurance premium. Depending on your particular situation, there may be loan options available that either don’t require monthly mortgage insurance payments or allow your monthly mortgage insurance payments to be dropped at some point in the future.
(Disclaimer: *BPMI = Borrower Paid Mortgage Insurance; LPMI = Lender Paid Mortgage Insurance. LPMI may not be cancelled by the borrower; it terminates only when the loan is refinanced or paid off, and it usually results in a loan with a higher interest rate than BPMI unless discount points are added to lower the rate. BPMI may be cancelled or terminated when the loan reaches 80% of the original value of the property.)
With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest rate can change after a specified period of time. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.
In the first phase of the process, your loan officer will take information to determine whether you qualify for the program. This will include information about income, assets and other real estate. We will ask if you intend to keep your current home or other properties.
You may have a total of three properties under the HECM for Purchase: the home you’re trying to purchase and two additional properties. Having more than three properties will make you ineligible for a HECM for purchase. If you are planning to keep other properties, we will want to know about your mortgage, property taxes, insurance and any homeowner association fees. We also will determine whether you are able to pay the closing costs, including the required monetary investment.
You’ll also complete HECM counseling. If you are buying a newly constructed home, a Certificate of Occupancy from your city is required to show that the house is ready to occupy.
Next, we will talk with you about expectations and obligations regarding the purchase contract, which are different from a home purchase with a traditional mortgage. With the HECM for Purchase, the seller must pay for any repairs required by FHA guidelines. * No concessions, such as seller payment of closing costs or funds in lieu of repairs, are allowed. The house may need more than one inspection if we require it. The property for purchase will be appraised to ensure its value is in line with the HECM expectations.
Then the loan will go to processing and underwriting. Additional documentation may be needed to verify your ability to pay a mortgage on property you plan to keep as well as the property taxes, homeowner’s insurance and any other fees, such as HOA dues for all the properties you will own. We also may verify again that you have funds for closing the loan that meet FHA’s requirements.
The last step in the loan process is closing the loan and funding. Your lender will notify you of the closing date and time.
After the loan closes, the servicer will confirm with we that you will occupy the new home within 60 days of closing. You are required to occupy the home within that time period. If you’re not occupying the home as expected in the loan terms, the loan may be repurchased.
It is a policy provided by the title company guaranteeing the accuracy of the title work done on your home at the time of purchase. As a buyer, you are required to purchase a lender’s policy of title insurance as part of your standard closing costs, which only protects the mortgage company. You may also choose to purchase an owner’s policy, which would protect you against any loss in the event of any legal issues relating to the title of your home.
Many different factors need to be analyzed to determine if refinancing is right for you, such as the length of time you intend to stay in your home, the type of loan you currently hold, or whether you’re currently paying monthly mortgage insurance. We are always happy to provide a recommendation for your particular circumstances.
Not everybody qualifies for the same mortgage rates. If you think about the times you have applied for a loan, you’ll remember that the interest rate the lender gave you was partly determined by your credit score, your debt to income ratio, and the amount of money you were planning to put down on the loan. These are some of the strongest factors that influence rates (though they’re not the only ones).
While home buyer John might qualify for a mortgage rate of 5% based on his credit score and other risk factors, home buyer Jane may only qualify for a rate of 6.25%. The offers you receive will be based on various factors, in addition to your credit score.
Much of it has to do with risk. The big idea here is that risk impacts the rate. A borrower who is considered a higher risk due to late credit payments, high debt ratios, etc., will typically end up with a higher interest rate than a borrower with a higher credit score, more income and significant assets.
We are often asked why there is so much paperwork mandated by the bank for a mortgage loan application when buying a home today. It seems that the bank needs to know everything about us and requires three separate sources to validate each-and-every entry on the application form.
Many buyers are being told by friends and family that the process was a hundred times easier when they bought their home ten to twenty years ago.
There are two very good reasons that the loan process is much more onerous on today’s buyer than perhaps any time in history.
During the run-up in the housing market, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their home. The government wants to make sure this can’t happen again.
Over the last seven years, banks were forced to take on the responsibility of liquidating millions of foreclosures and also negotiating another million plus short sales. Just like the government, they don’t want more foreclosures. For that reason, they need to double (maybe even triple) check everything on the application.
However, there is some good news in the situation. The housing crash that mandated that banks be extremely strict on paperwork requirements also allows you to get a mortgage interest rate as low as 3.43%, the latest reported rate from Freddie Mac.
The friends and family who bought homes ten or twenty years ago experienced a simpler mortgage application process but also paid a higher interest rate (the average 30 year fixed rate mortgage was 8.12% in the 1990’s and 6.29% in the 2000’s). If you went to the bank and offered to pay 7% instead of less than 4%, they would probably bend over backwards to make the process much easier.
Instead of concentrating on the additional paperwork required, let’s be thankful that we are able to buy a home at historically low rates.