Locking the loan is the banks assurance that if you close on a home within the lock period, provided that the home meets the qualifications that you have been approved for, you are guaranteed specific terms of the loan.  But what happens if you switch homes or the price adjusts as the result of the inspection or appraisal?

Rest assured the loan lock is based on the qualifications of the buyer not the home specifically.  So long as the home closes (or for that matter any home close) within the lock period, and the home qualifies for the specifications of the loan, a buyer will still be able to get the terms of the loan lock. 

This very question is typically why we do not advise buyers to lock a loan until we are pretty darn sure we will close.  With interest rates as attractive as they have  been lately however, some have been quick to pull the trigger.  That is fine, but if for some reason you are not able to close within the lock period, it will cost you to extend the lock.  Sometimes a lock can be extended, but not always, so be careful. 

Give me a call if you need help.

I received the following info from a mortgage rep I work with.  Looks like FNMA is changing the rules again. 

PS – If you need any help with a mortgage.  Lance Morgan is a great resource.  He is the one who sent me this info.  His contact info is at the bottom.

Here is the info:

Timeline:
Effective with all applications dated June 1st and after.
Summary:
FNMA is requiring the implementation of their Loan Quality Initiative. 

• Requires a more comprehensive review of the initial credit report for alerts to confirm customer identity.
• Second review of Customer credit prior to funding to ensure there are no new liabilities that could affect qualification for the loan.

Impacts:

• Lenders will now need to secure signed letters of explanation for all credit inquiries showing on the credit report.  (The letter can be signed by the Customer at closing).
• The Lender will run a second credit report on the day the file is being prepared for loan documents. The second report will not update credit scores. 
• Changes to the total debt ratio that exceed 2% will require a lender to update the credit information and rerun the approval.  This could change the approval decision.  Any new inquiries that did not show on the initial credit report will require another letter of explanation from the Customer.

To Dos:
Let your Customers know about the new credit requirements and carefully coach them not to increase their debt during the mortgage transaction.  It is HIGHLY critical that once a borrower applies the DO NOT use credit cards, lines of credit or apply for new credit.
I will continue to counsel my buyers about such changes and I want you to be aware because I can foresee this being an issue especially with lenders who lack in the communication department.

Lance Morgan
Branch Manager/Mortgage Consultant
Windermere Mortgage Services Series LLC/WRE
Serving: Lake Forest Park and Wedgwood
425.478.6412  Cell
206.306.9483  Office
206.306.9463  Fax

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Rob Graham, Seattle Home Buying Expert

Windermere Real Estate

206-321-6349

www.robgrahamrealestate.com

robgraham@windermere.com

She is considering buying a vacation property on the coast and was wondering how to approach finding a lender.  Here was my response to her:

R,

Congrats on considering buying a little vacation home.  Sounds like fun. 

Here is a link to a page on my web site that has great mortgage reps that would be happy to help you.

http://robgrahamrealestate.com/Recommended%20Home%20Loan%20Specialists

As far as advice is concerned, start with your credit score.  You can ask for a copy of your credit rating for free from the mortgage person you speak to.  They will need to pull your credit to qualify you for a loan.   Once they have a copy you can ask them for it, rather then you pulling your credit and then having a bank pull it again.  Once you have a copy make sure all the info on it is correct and write to each of the credit reporting services individually if there is inaccurate information.  They are required by law to research and such written requests.  If your credit isn’t spectacular you may want to subscribe to one of those on line services that monitor your credit for you.  There is a monthly fee involved but they do offer some good advice for how to improve your credit score such as, getting your credit card totals down to less then 1/3 of what you can possible borrow. 

When thinking of financing, start with the end in sight.  Decide what you are comfortable for in a monthly payment.  Start with your existing monthly payment and decide how much more you feel comfortable paying.  Then you can test your theory.  Next month put the extra amount away in savings and see how it feels to not have access to it.  If the amount feels to high or too low you can adjust. 

The other nice feature of this approach is that if you keep doing this over the next few months you can accumulate a nice little next egg to use towards closing costs, moving expenses or even new furniture.  Either way you won’t suffer sticker shock of a new monthly payment. 

One more quick piece of advice:  Don’t try just one mortgage person.  If you have a relationship with a bank you may want to start there, but also try at least one broker and even a credit union if you have access to one.  Each offers slightly different products and services and you may find a better deal by shopping around a little. 

If you ever have a question, don’t hesitate to contact me.  I’ll be happy to help and even

feature your question her on the blog. 

Talk to you soon,

————————————————————

Rob Graham, Windermere Real Estate

Seattle Home Buying Expert

206-321-6349

robgraham@windermere.com

Checking out a “free” credit report service is maybe not your best option however.  An article in the Seattle times this week, helps expose the evils of some companies, who advertize as free, but then insist that you subscribe to a service to get the “free” report.

http://seattletimes.nwsource.com/html/businesstechnology/2011300727_pfcreditreport14.html

In addition to needing to subscribe, many will bombard you with confusing windows on the web site that you need to navigate through to get to the report section.  I have heard others horror stories of the difficulty in cancelling later.  Long story short, very little in life is truly free.  Make sure you know what you are getting into first.

If you want a free report go to:

www.anualcreditreport.com or call 1-877-322-8228

You are entitled to one free credit report per year from one of the three major reporting agencies. 

Keep in mind that if you have recently applied for a loan or tried to buy a car, and a bank has pulled your credit report, you can ask them to give you a copy of your report that they have on file. 

Be sure to contact the agency in writing if you find any inaccuracies.  They are obligated by law, to investigate your claim and make necessary corrections.

If you do pull your own credit report it will have an effect on your rating.  Typically pulling your own credit report will not effect you at all for the first check each year.  Each additional check will cost you 5 points against your credit rating.  Still 5 points in my opinion is not enough of a difference to prevent me from checking my own. 

Give me a call if you need help.

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Rob Graham, Seattle Home Buying Expert

Windermere Real Estate

206-321-6349

robgraham@windermere.com

www.robgrahamrealestate.com

• Previously the charge for up front MI was 1.75% of the loan amount. 
• As of April 5th the up front MI will be 2.25%.

That may not sound like much but lets do the math.  Here are the numbers before and after the change 0n April 5th for a $300,000 loan:

• Before April 5th = $5250
• After April 5th = $6,750

Here is the good news, this doesn’t represent a huge change to a seller.  In most cases I have been advising my clients to ask for closing costs to be paid by the seller.  In those cases there is no change to you. 

Still, I see the increase in money costs to be a sign of things to come.  The cost of  money is not going down any time soon and should go up incrementally for the foreseeable future. 

It’s still a great time to buy.  Give me a call if you need help.

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Rob Graham, Seattle Home Buying Specialits

206-321-6349

www.robgrahamrealestate.com

robgraham@windermere.com