Who you'll meet on your mortgage application journey
If you're planning on buying a new home, it's hard to say for certain how many places you'll look at before finding the one that fits you and your budget. For some people, it's a mere handful; for others, it may be in the double digits.
The mortgage process is a bit more straightforward, as there are a specific set of individuals who are there to guide you through the entire homebuying journey. Here are the key mortgage professionals you'll come across during the process of applying for a mortgage.
The two main contacts you'll have perform largely the same functions, but in slightly different capacities: Loan Officer and Loan Officer Assistant.
The loan officer is typically the first person you’ll speak with during the loan process. He or she will review your personal homeownership goals and help determine what type of loan best fits your needs. They’ll assist you with completing the loan application, review your credit and can also provide you with a pre-qualification letter.
Loan Officer Assistant
The loan officer assistant works closely with the loan officer in a helping capacity. They gather and review additional documents that may be needed to complete your loan application. They can also answer any questions you may have if your loan officer is not available.
Loan processors generally come into the picture further along in the application chain of events. What they do is organize all the relevant documents so that the mortgage lender has what it needs for final approval. They also proofread, checking to see if anything is missing.
Mortgage underwriters are primarily charged with determining if you have the appropriate qualifications to borrow. Some of the factors taken into account include your annual salary, your employment history, debts - both the type and how much - as well as available assets, such as checking and savings accounts.
As detailed by The Truth About Mortgage, the underwriter will render one of three decisions: approval, denial or suspended status. This last one means that you may need to provide more documentation for the mortgage process to move to the next step.
You've probably heard the term "closing" as it pertains to buying a house. The closer is the point person for this last step. Closers prepare and assemble the documents necessary for closing to take place. They also coordinate with other professionals involved, such as lawyers (if necessary), agents and vendors.
Now that you're armed with a brief synopsis on who you'll meet during the homebuying process, the rest of the story is yours to determine.
Find a Loan Officer today to get started.
Who should I talk to first when buying a home?
You've decided to enter the housing market. Now what? Well, if you're like most people, aside from looking at what houses are available for purchase on various listing websites, you probably think talking to a real estate agent is the first person with whom to speak. You shouldn't have a problem finding one, as there are over 1.1 million of them in the U.S., according to the National Association of Realtors®.
While a real estate agent will certainly help you locate your forever or for-the-time-being home, listing agents actually aren't the first people to go to. Your best bet in the early going are loan officers. But what, exactly, are loan officers. More to the point, what makes them a go-to source starting out?
What does a loan officer do?
Loan officers perform many different functions in the mortgage realm. For the sake of simplicity, they serve as the gateway to obtaining a home loan.
When you meet with a loan officer, he or she will go over various personal details that will tell them whether you're a good candidate to buy a house. Some of these items they'll look through are pretty basic: whether you're gainfully employed, what you earn per year in salary, what kinds of assets you have available, and so on.
Loan officers will also run a credit check to get a determination of your credit score. The credit scoring bureaus - TransUnion, Experian and Equifax - use slightly different scoring metrics, but they all work from the fundamental premise of gauging how consistent you are about making your payments on time. The higher your score, the better chances you have not only of being approved for a loan, but securing one at a lower rate of interest compared to someone with a low score.
In short, loan officers help you get the proverbial ball rolling as it pertains to home financing.
Who employs loan officers?
Much like real estate agents, loan officers work for various entities. As noted by the Bureau of Labor Statistics, there are approximately 318,600 loan officers to choose from throughout the U.S., 80 percent of whom are employed by "credit intermediaries." That's an umbrella term for credit unions, mortgage companies and commercial banks.
It's fitting that loan officers work for credit intermediaries, because loan officers serve as the middleman. These individuals talk to loan applicants like you to gather and evaluate the personal information you provide, who then get in touch with management to make a decision on mortgage approval.
Consumer loan officers - the kind that you'll meet - specialize in loans for individual borrowers, but there are other varieties, such as commercial loan officers. They primarily deal with business owners interested in obtaining property for business purposes.
What makes loan officers truly significant?
Aside from explaining the details of what you need to apply for a mortgage, loan officers can give you a better sense of how much house you can afford. Home values go up and down, largely depending on supply, demand and what other properties in the area sell for. Loan officers help you determine the types of houses that fall in your budget, ensuring you don't settle on a place that you can't afford.
Additionally, loan officers can supply you with something that can provide you with an advantage: a prequalification letter. The current housing market favors sellers, meaning more people are looking to buy a house than sell. As a result, the market is highly competitive.
With a prequalification letter, though, your odds of getting the house you want improve because sellers know you have the means with which to buy. With due diligence - like meeting with a loan officer first - you're one step ahead of the game compared to people who met with a real estate agent at the outset.
Choices are a great thing to have when you're looking to buy a house. Loan officers provide them and, at the same time, help to narrow the market down so you avoid wasting time. So, what are you waiting for? Enter the market today by meeting with a reputable lender.
Home sales are down: What that means for you
If you're considering buying a new house, you've probably noticed the pace of people purchasing homes continues to rise in many areas nationwide. But, if you take a more recent look at the data, the trend has shifted a bit in many regions.
According to the latest figures from the National Association of Realtors, existing sales have fallen for three consecutive months. The most recent evidence was in June 2018, when transactions dropped approximately 0.6 percent from May and 2.2 percent on a year-over-year basis.
The same was true among pending home sales, a statistic that measures contract signings which have decreased for six months in a row, NAR revealed, sliding 2.5 percent on an annual basis.
Even newly constructed single-family property buys dipped in summer's opening month. As noted by the U.S. Department of Housing and Urban Development, new-home sales plunged nearly 5.5 percent in June to a seasonally adjusted annual rate of 631,000 units.
So, what does this all mean for you? If you're a first-time homebuyer aiming to land a residence at a price you can afford, here's what you may be able to expect should the trend continue:
Home prices poised to pull back
Perhaps the only thing more certain than Americans buying homes is the upward trajectory of asking prices. The median for existing homes climbed yet again in June, marking the 76th straight month they've done so on an annual basis, NAR reported. However, with home sales down virtually across the board, the direction of home values may follow suit. What's been preventing this from happening sooner is supply not being replenished at a fast enough clip.
But the inventory situation appears to be improving, based on the most up to date numbers from the NAR. At the conclusion of June, unsold properties totaled around 1.9 million, the equivalent of a 4.3-month supply, according to NAR. This means it would take right around a quarter of the year for inventory to run dry were no other properties to enter listings. The most noteworthy aspect of these numbers is 1.9 million. Up 0.5 percent from a year ago, it's the first time in three years that inventory rose compared to 12 months earlier.
Listings to remain 'active' for longer
Twenty-six days: That's how long it takes before a for-sale house is snatched up by a prospective buyer, according to NAR's latest figures, down from 28 days compared to last June. In fact, more than half of the houses that sold then were on the market for a month or less. That houses are claimed so quickly can be extremely frustrating, but if the sales slowdown persists, those for-sale signs should hang around for lengthier stretches.
Waiting until winter may be wise
When is the best time to buy a house? That's a question all prospective buyers asks themselves at some point. Generally speaking, it's the summertime, when more listings become available with kids out of school and the weather pleasant. However, if you're looking to buy at a low price, it may behoove you to wait until the temperatures plunge. Real estate professionals note that buying in the winter can really pay off - literally - because if sellers haven't had luck, they'll be more inclined to sell for less than their initial price point. And if the sales dip continues, that's a scenario you're bound to happen upon.
The housing market is a roll of the dice - you never know what's going to happen from one moment to the next. But if you play your cards right, slumping sales can work to your benefit.
3 mortgage mistakes you want to avoid
Applying for a mortgage could be a lot easier than you think. If you're fully employed and have a history of paying off your bills on time, chances are good you'll be approved.
Having said that, there are definitely some mortgage mistakes you'll want to avoid, especially if this is your first time in the market. Here are a few of them:
1. Failing to check your credit report
The credit score found in your credit report serves as a quick means for your lender to establish how responsible you are with finances. While traditionally quite accurate, they're not error-free. In other words, there could be inaccuracies on your report that adversely affect your score. That's why you should make sure to check your report from all three bureaus before applying to ensure everything is as it should be. You can file a complaint if something appears off.
2. Applying for new credit
While there's nothing necessarily wrong with opening a new credit card, doing so shortly before you apply for a mortgage isn't a good idea, financial experts warn. As noted by FICO, taking out additional credit triggers what's known as a hard inquiry. As opposed to a soft inquiry, where you take a look at your credit report, a hard inquiry authorizes the lender to examine your credit because you're looking to obtain additional capital. This process in and of itself causes your score to dip. The impact is usually small, but the difference may be enough to raise your interest rate or trigger a loan denial.
3. Having little money saved
While a steady income stream is important, it's not always sufficient when it comes to purchasing a home. Buying a house often (but not always) requires a down payment, and if you don't have enough to make one, getting a new house might become a bit tougher.
Knowledge is your biggest advocate when you're looking to buy. So long as you're prepared and do your research, the mortgage approval process can be like a walk in the park.
What military members need to know before buying a home
Buying a house while serving in the military could seem like a fruitless pursuit. After all, with active-duty service members frequently on the move due to the nature of their work, becoming a homeowner may not always make sense.
Contrary to popular belief, though, not only are millions of the nation's best and brightest homeowners military, but they also tend to reach the American dream sooner than those who aren't in the armed forces, according to industry statistics.
For example, the median age of an active-duty service person who owns a house is 34 years old, according to the National Association of Realtors. This compares to a median of 42 years of age for non-military Americans.
If you are currently serving or hold veteran status, here are a few of the key things you should know before entering the housing market — pointers that can help you decide if a home purchase sooner than later is in your family's best interest.
1. It's actually less expensive than you think
It's safe to say that the market is currently one that favors home sellers, given supply is limited and demand is quite high, as detailed in NAR's monthly home sales reports. But cost largely depends on where specifically you're buying and your financial circumstances.
As a military member, you may well pay less than those who aren't in the armed services. For example, you may be able to purchase a residence without any money down through mortgage programs offered by the Veteran's Administration through private lenders. 'No down payment' plans are available to both veterans and active duty, although some restrictions may apply, such as if you've just recently joined one of the five branches.
2. Be sure to factor in your frequency of travel
During some parts of the year, you may be on the road quite a bit, while hardly at all during other months. Then again, maybe you're entering a phase of your military career where your workday is the more typical 9 to 5.
Whichever it may be, consider your family's current needs and those that are upcoming. If you're traveling practically every week or it's not unusual for you to be reassigned to a new base unexpectedly, it may be best to sit tight and buy when your schedule is more predictable.
3. It's a great time for improved home values
You've heard it before, and it still rings true: Real estate is all about location, location, location. Where you live typically determines what you can expect to spend. But buying a house is also about timing, and there's no time like the present to take advantage of equity gains.
Through the first three months of 2018, approximately 14 million mortgaged properties were equity rich, according to estimates from ATTOM Data Solutions. That's the equivalent of one in four houses. In other words: You may be able to sell your home for much more than you bought it - if your new-home purchase won't be your last.
Military.com and NAR's websites have other considerations to take under advisement when you're contemplating a home purchase. Knowing your goals and getting in touch with your family's needs can serve as the compass that points you in the right direction. A loan officer will be able to answer any questions you have about the VA Home Loan Mortgage Program, so bring your questions!