Ryan Bolton here, local mortgage expert answering more questions that I found on the internet!
I really enjoy doing these Q&A session so if you have any comments or questions please post!
Question: Can we withdraw your application for home loan after it’s been submitted but
before we received the approval letter.
Answer: Yes! You can withdraw your application at any time. It’s not something where once you have an application in you’re stuck with that lender or that home or that contract or any of
those types of things. It is just the information-gathering stage you can literally withdrawal or cancel your application almost at any time. Even all the way to the very very end. There’s a lot
of protections out there for consumers that don’t force you to stay with that lender or that loan that application. I’m amazed how many people don’t withdrawal even when they want to thinking they can’t.
Question: What does a home equity loan cover?
Answer: A home equity loan is like a Visa or any other line of credit. Its just tied to your home
so you can use that money to do almost whatever you want I mean legally of course.
Question: How does a home loan pre-approval work?
Answer: We get an application we review the basic numbers on that application and based on the information submitted, we can issue a pre-approval letter. We will pull the credit report and we will check the income and assets that are listed on the application. The more we can get
verified up front strengthens the pre-approval but a lot of times we can start with just whats on the application. The processing and underwriting stages is were more of the verifation and inspection happen. But the pre-approval is really the application and on that form is has enough
information on it to where we can have at least get some sort of a surety that the loan would go through. SO the acutare that application is the more likey the final approval will be issued and
you get the loan and the home!
Question: How far back do mortgage companies look at credit history?
Answer: We will look at the whole thing. It’s a credit history not just a credit year. The score helps us to weigh that history. When it comes to lates they will look closesest on the last 12 months. On bigger credit issues like foreclosures, judgemnts and bankruptcy, they will go back 7-10 years!
Question: When my child inherits my house upon my demise, can they just assume the existing mortgage?
Answer: Most likely, No. When they inherit the property, they will most likely have to either refinance or sell the property to get rid of that debt unless it’s an FHA loan. FHA Loans are assumable but you want to put some things in place to make sure they have power of attorney
or something like that. Most loans are not assumable. I highly highly recommend getting a trust to help with these issues.
Question: Who gets the property when a mortgage is foreclosed?
Answer: The first stage of foreclosure is a notice of default. This is where payments have been missed and the lender has started the waiting period, typically 90 days, for that current owner to try to sale refinance, or modify the loan. Once that stage is pasted the property can go to
auction. The highest bidder would then become the owner. Sometimes that is the bank because they will start the bid for the home at what is owed. If no one bids higher than the bank becomes the owner. If there is a higher bid, than they become the owner.
Question: How many home equity loans can you have.
Answer: As many as you can qualify for. There is no cap. Now if you are trying to get multiple loans on the same home the terms are going to get worse and worse because of the risk and lien position on the home but there isn’t a law or rule on how many you can have…. Except Texas. They have many rules about Home Equity Lines and second mortgages.
Question: Can a person take a home loan and use the money for any purpose?
Answer: Yes. There’s not anything where the lender is going to require the money to go to a certain thing other than maybe paying off debts as part of any necessary qualifying. So maybe there is some of the money that needs to pay off debt to qualify for the loan but as far as cash back in hand, those funds can be used for anything. These are loans so they also don’t count
adjust your income.
Questions: Can someone else take a mortgage out on your behalf?
Answer: Yes and no… This one is a bit tricky because someone can get a mortgage in their name and then let you stay in or rent the house. They can take put a loan with you as a co- signer. But if you are on the loan, then your income and credit would have to be part of the loan
qualifying. So someone couldn’t, without committing loan fraud take out a loan in your behave without you knowing about it.
Question: If you have an FHA loan, is it better to refinance the loan before renting it out?
Answer: Generally yes. You will get better rates and terms and might be able to get the mortgage insurance dropped. If you wait until after you have moved out, then the rates ans terms will be worse. It would really come down to the terms and payment you have now and what your payment would be after the refinance. Also if you need to pull some cash out for the
down payment for the next house I would do the refinance first. It would still come down to new payment and th e equity you can pull out.
Question: What is the difference between a home loan in a foreign home loan?
Answer: There are loans for people that are resident aliens or have green cards or ITIN numbers. So maybe that is what is being asked here. I’m not sure but a home loan really is securing that property as collateral. The home is what they take back if payments are not made
Question: Do I have to disclose all bank accounts to a mortgage lender?
Answer: No. You don’t have disclose all of them. The accounts we need to verify would be any accounts where the down payment, closing costs, earnest money, and reserves are coming from. Many loans have reserve requirements of 1 to 6 months worth of the new payment on top of the down payment and closing costs. We will also review the last 60 days’ worth of deposit activity in those accounts. We’re going to look for any large deposits that are non-payroll so suddenly 20 grand just hits that account, they’re going to want to know where that money came from. If it was a loan that we need to add the payment or if it was the sale of a car or another home. Or if it was gift funds from a family member. All large deposits must be verified for Anti-
Money Laundering laws. Unfortunately, money laundering or something where illegal funds are hitting the account, happens a lot with Real Estate so they created these laws and guidelines to
make sure that we’re not being involved in some money laundering scheme or something like that. I have a lot of clients that will start saving up for a house without putting the money in the bank. Maybe they will set up a drawer or a safe at home and start putting money in there, but
this gets hard to use. It’s much better to get those funds into a separate account so it can be verified. Plus, you can get a better rate of return on your funds!
Question: What happens if the mortgage lender goes bankrupt?
Answer: That’s a really good question, a lot of times the servicing of that loan can be done by Fannie and Freddie as the investor, or they just have a servicer that handles the day-to-day payment collection and escrow distribution so a lot of times when they do go bankrupt it gets assigned to another company. They will still collect payments on the note. It doesn’t mean that
just because your lender went bankrupt that you just don’t have a mortgage anymore. They’re still a securitize loan that’s pooled up with a lot of other loans. The loan will get sold to somebody else or another mortgage company comes in and buys that entire mortgage company and takes over all their assets and all their debts.
Question: Is it possible to get a jumbo loan with bad credit?
Answer: Sure. It will depend on how bad the credit is. Rates and terms are going to be worse of course. But there’s a lender out there for just about every type of borrower! Best thing to do is work on the credit! Get it repaired or disputed or add some positive trade lines to can get better loans!
Question: Should I refinance my mortgage for cash?
Answer: Depends! It depends on the rate and term that you’re getting. It depends on where the cash is going. If you are saving enough or the money is being used to improve the home or pay
off other debts they sure! JUST do something with the savings. Let’s say you’re paying off a car, Visa, maybe getting rid of mortgage insurance or other debts so you are savings say $500 a month. Make sure you do something with the savings because you have obviously been
making that payment now for how many years. You were already budgeting and you’ve been used to that payment. DO something with the savings first. Don’t go all the way back down to a lower payment. Increase your 401k contribution at work so you just have your paycheck. Set up a separate account for savings. You will be so much further and ahead of the ball game in 10 years!