Top 3 Questions week of Sept 9th 2018

Top 3 Questions week of Sept 9th 2018

Top 3 Questions that I was asked by Clients this week:

  1. Credit Score:   What Score is used and what is the Min Score needed to buy a home?
  2. Can you use Social Security Income to qualify for a Mortgage?
  3. How much are Closing Costs to get a Mortgage?

 

CREDIT SCORE:

This is probably the most asked question I receive on a weekly basis.  Unfortunately, there is so much INACCURATE information out there on the web and from people proclaiming themselves as experts that it makes it even harder to get the TRUTH about Credit Scores.  So instead of sitting back and watching people ruin their credit, even more, I decided to take action and actually DO SOMETHING about it.  So I developed www.CreditScoresandMore.com:

At www.CreditScoresandMore.com you can access your TRUE Credit Score that your Lender will use.  No matter if you’re looking for your Credit Card Score, Mortgage Credit Score, Insurance Credit Score or your Auto Credit Score you can find it at CreditScoresandMore:

What is the minimum Credit Score needed to qualify for a Mortgage?  Great question and the answer is:  It Depends.

It Depends on who you call.  If you call one of the Big Banks they will most likely advise you that you need a 620-640 Credit Score.  However, there is good news,  FHA Mortgage Loans only require a 580 Credit Score, but you will have to find a Mortgage Lender who will accept Credit Scores down to 580.  So if you have been turned down for a Mortgage Loan please don’t lose hope there may be a solution for you out there.  I have been able to help thousands of people buy a home even after they were turned down by one of the BIG BANKS.

WHY?   OVERLAYS:

Social Security Income to qualify for a Mortgage:

I received a call a few weeks ago from a young lady looking to purchase a home with her mother.  She advised me that she would be applying for the loan by herself because she was told her mother could not be on the loan because her only source of income is from Social Security.  I paused and had her repeat herself.  Then I stated that not only can she use the income but she can multiply her monthly Social Security income by 115% when qualifying for a mortgage.  This not only allowed this young lady and her mother qualify for a Mortgage it also allowed them to qualify for a Grant loan that provided them with 5% of the loan amount for Down Payment Assistance.  How much are Closing Costs to get a Mortgage?

 

How much are Closing Costs to get a Mortgage?

This SHOULD BE one of the BIGGEST FACTORS when deciding on a mortgage especially if you looking to BUY a home.  This question has to be broken down into TWO areas and depends if you’re refinancing a Mortgage or Buying a home:   Then let’s break it down even further:  What are the Costs for the Loan portion of the transaction and what are the Costs for the Legal side of the equation:

Loan portion:   Here is what you typically see when applying for a Mortgage:

 

  • Application Fee: This fee covers the cost for the lender to process your application. Before submitting an application, ask your lender what this fee covers. It can often include things like a credit check for your credit score or appraisal as well. Not all lenders charge an application fee, and it can often be negotiated.
  • Appraisal: This is paid to the appraisal company to confirm the fair market value of the home.
  • Credit Report: A Tri-merge credit report is pulled to get your credit history and score. Your credit score plays a big role in determining the interest rate you’ll get on your loan.
  • Origination Fee: This covers the lender’s administrative costs. It’s usually about 1 percent of the total loan but you can sometimes find mortgages with no origination fee.
  • Underwriting Fee: This also goes to your lender, covering the cost of researching whether or not to approve you for the loan.
  • Loan Discount Points: “Points” are prepaid interest. One point is one percent of your loan amount. This is a lump sum payment that lowers your monthly payment for the life of your loan.

Legal portion:    Here is what you typically see when Closing on a Mortgage:

 

  • Attorney Fee: This pays for an attorney to review the closing documents on behalf of the buyer or the lender. This is not required in all states.
  • Closing Fee or Escrow Fee: This is paid to the title company, escrow company or attorney for conducting the closing. The title company or escrow oversees the closing as an independent party in your home purchase. Some states require a real estate attorney be present at every closing.
  • Courier Fee: This covers the cost of transporting documents to complete the loan transaction as quickly as possible.
  • Escrow Deposit for Property Taxes & Mortgage Insurance: Often you are asked to put down two months of property tax and mortgage insurance payments at closing.
  • Lender’s Policy Title Insurance: This is insurance to assure the lender that you own the home and the lender’s mortgage is a valid lien, and it protects the lender if there is a problem with the title. Similar to the title search, but always a separate line item.
  • Property Tax: Typically, lenders will want any taxes due within 60 days of purchase by the loan servicer to be paid at closing.
  • Recording Fees: A fee charged by your local recording office, usually city or county, for the recording of public land records.
  • Survey Fee: This fee goes to a survey company to verify all property lines and things like shared fences on the property.  This is not required in all states.
  • Title Company Title Search or Exam Fee: This fee is paid to the title company for doing a thorough search of the property’s records. The title company researches the deed to your new home, ensuring that no one else has a claim to the property.
  • Transfer Taxes: This is the tax paid when the title passes from seller to buyer.

When it comes to these costs its pays to SHOP:

Average Closing Costs on a Home Loan

Bank of America Chase Citibank Wells Fargo Average
Lender Fees $2,694 $595 $1,263 $995 $1,387
Third-Party Fees $2,931 $2,675 $2,134 $2,610 $2,819
Taxes and Prepaids $3,038 $2,710 $2,988 $3,227 $3,021
TOTAL $8,663 $5,980 $6,385 $6,832 $7,227

Why do I strongly suggest Shopping around?

My Average client pays less than $500 for my services (not including Legal fees).  When purchasing a home the Sellers attorney customarily handles the legal portion of the transaction and therefore I have no control over what the charges will be.  However I, do have a BIG INFLUENCE on how much the costs will be for the Mortgage portion of the transaction.

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Regulatory Information: Nationwide Multistate Licensing System's Consumer Access Website" (www.nmlsconsumeraccess.org), Premier Financial Services, Inc. NMLS #266214. The State of Illinois | Division of Banking located at 100 W Randolph St, Chicago, IL 60601 (312) 814-4500 | NMLS # 266214 Dan Frio NMLS 246527
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