Page 41 - October 2015

FINANCE
Buying or Refinancing:
Here’s everything you need to know about mortgages
Recently, I’m sure you’ve heard a lot about the changes being made in the mortgage industry, and the new rules regulations and disclosures that have been put into place to protect and safeguard you when you buy or refinance your home. And while we here at Blueleaf Lending support and applaud those changes, we think it’s just as important that you know what has not changed, and to emphasize that, with all the new rules, regulations and disclosure cri- teria, buying a new home or refinancing your current one is just as straightforward a process as ever.
There are only three things we need to check: Your assets, your credit and your income.
Fact – 20 percent down is not necessary.
It’s hard to believe, but there are multiple articles that give the impression you cannot purchase property without 20 percent down. While it is true that you won’t need to pay mortgage insurance if you put down 20 percent, it’s also true that you can put down as little as 5 or even 3 percent on a conforming loan, 3.5 percent on an FHA loan, and zero percent on a VA loan. Plus, you can negotiate to have the sellers pay your closing costs, and there may also be programs to help you out with down- payment assistance. Bottom line: Talk to your lender, to see if you have enough to close.
Perfect credit is not required, (but pulling it is).
Although you will probably get a better interest rate (and more favorable terms on MI if you need it), you don’t need to have an 800 credit score to be approved. And since a 620 score can buy just as
much house as an 800 score, let’s find out what yours is. This is the first step toward pre-approval, and it’s absolutely necessary for us to check it, even if you already pulled it yourself online. A word of cau- tion: Even if you have a decent credit score, there are still waiting peri- ods on certain derogatory events (past bankruptcies, foreclosures or short sales).
“What do I qualify for?”
Quite frankly, more often than not, the answer is, “Probably more than you want to spend.” Most people don’t’ realize that underwriting guidelines allow you to qualify for a mortgage payment equal to 43 percent of your gross income, which we’ll calculate from your pay stubs and tax returns.
The question you should be asking is: “What kind of home can I afford keeping my payments in a range that I find comfortable?” Although, since you can deduct your property taxes and mortgage interest from your income at the end of the year, this number might very well be slightly higher than you think (or it might be lower than the rent you’re paying now.)
Also, when it comes to income, as long as you’re a W2-salaried employee, you should be fine. If you’re self-employed, or work on commission, you may need to have a two-year history before you can qualify for a mortgage. At the end of the day, your best bet is to call me so I can answer any questions you might have and put your mind at ease before you start the mortgage process. d
Mike Coyne (NMLS #222935) is vice-president of Blueleaf Lending. If you have questions for Mike, call him at 773-774-4900.
42 CHICAGO LODGE 7 ■ OCTOBER 2015
MIKE COYNE