But, prequalification is still the beginning of the loan process. Your mortgage application still has to go through underwriting before it can be approved.

Who are underwriters?

Underwriters work for your lender or mortgage company. They usually have years of experience in the mortgage industry and have gone through extensive training before they get to their positions. They know the banking and lending industry and they know what to look for in a mortgage application.

What do underwriters do?

Underwriters work a bit like mortgage detectives. They investigate your application and verify all the claims you made. They make sure you were truthful about your employment and income and about your credit history. When they find red flags or discrepancies, they usually ask you to clarify or explain the situation before flatly denying your application.

How they do it.

Underwriters look through all the material you supplied with your loan application and all your statements. They also look at your pay stubs and verify your income and debt. They pull your full credit report and look for any delinquencies or issues paying past debts.

They evaluate your history of paying large debts in a time and responsible way and get more information from you and creditors about blemishes on your credit history.

What to expect.

You will probably never interact directly with a mortgage underwriter. Your lending agent will hear from the underwriting department if something is missing or underwriters need you to explain anything and your agent will contact you to request the documentation.

The result can make underwriting seems like a mysterious and dangerous giant who could crush your dreams with a gentle squeeze. But in most cases, underwriters are working to get your loan approved. It’s also their job to make sure you are worthy of the loan; and they will be thorough.

The big decision…

Once underwriting approves your loan, you’re usually cleared to close. It’s a great feeling. Enjoy your new home or the savings you will realize after refinancing!

If you have any other questions about how underwriting works, please contact the mortgage experts at Mortgage Solutions Financial. Our specialists are always available to answer questions and guide you through the process.

Refinancing can help you reduce your interest rate and monthly payments.

Requirements:
The surprising thing about the USDA streamline refinancing program is how little you will actually need in order qualify for the program. You must have originally financed your home purchase with a USDA loan. Other than that, the loan program requires little of what you had to originally provide in order to borrow the money for your mortgage.

Here are a few of the things you would normally need if you were refinancing  standard loan:

• Proof of USDA loan eligibility: If your home qualified for a USDA loan when you bought it, you do not need to certify that the property is still eligible.
• Full credit report: A lender will look at your credit score, but will not generally pull a full credit report for the USDA streamline program.
• No appraisal: You do not need the current market value of the home. The loan will match the old one regardless of home value increase or decrease.
• No debt ratio: The USDA does not measure your debt to income ratio again.

Standard USDA streamline refinancing program

The pilot program is only available in select states. But the USDA streamline refinancing program can help all kinds of homeowners just as well in many cases. There aren’t that many differences between the two programs:

• Full credit report reviewed for standard streamline, not for pilot
• The loan can be USDA guaranteed, but not a direct USDA loan
• Debt to income ratio can’t exceed 29 to 40 percent without a waiver.
• Borrowers can be deleted or added as long as one original borrower remains. In the pilot program, all borrowers must be the same.
• Pilot program participants can roll more of the fees into the loan.

The USDA streamline refinancing program – and the pilot – are both excellent ways to refinance if you have a USDA loan. If you have questions about these programs and how they work, contact the mortgage experts at Mortgage Solutions Financial. We are always available to answer questions and guide you through the refinancing process.

PMI does not insure you against anything. It protects your lender in the event you stop making payments. It’s a premium that can add $50 to $250 a month to your monthly expenses.

There are a few ways refinancing can impact PMI. Some are good, and there are ways to avoid a negative impact.

Refinancing can help you get rid of PMI.

As home values have started to improve, some borrowers might be surprised when they have their homes appraised and find that they have more than 20 percent equity in their properties. Once you have 20 percent equity, most lenders will not require you to pay PMI.

If your home has increased in value since you purchased it, but you don’t quite have 20 percent, you could have the option of prepaying your mortgage insurance. If you have the cash, the payment could trim your monthly payments and you could avoid having to get another appraisal when request your lender drop the PMI.

HARP 2.0

The government created  a program to help homeowners oweing more than their homes are worth refinance, even if they used a conventional loan to buy.

If Fannie Mae purchased your loan, you could qualify for the Home Affordable Refinancing Program.

Refinancing won’t force you to pay PMI.

If you put 20 percent down when you purchased your home in the height of the market and you want to refinance your conventional loan now, you might be worried you will be saddled with PMI after refinancing due to a reduced home value.

But the Home Affordable Refinancing Program prevents that from happening. If you refinance through HARP 2.0, you won’t have mortgage insurance moving forward if you didn’t have to pay it before.

Applying

The mortgage experts at Mortgage Solutions Financial have helped thousands of homeowners finance and refinance. They know and understand the HARP 2.0 program and can help you consider all of your options.

But before you start picking out new drapes, take these important first steps.

1. Get prequalified for a mortgage.
   You have to get the mortgage first. There’s nothing worse than finding your dream home and discovering you can’t afford it. Talking with a mortgage expert before you start your home search will help you know what you can afford.
   Find out how much you could borrow and what your monthly expenses would be, so you can know if you would feel comfortable borrowing the maximum.
2. Pick a loan program.
   There are a lot of ways to finance a home purchase these days.
   Find a good mortgage company where specialists are familiar with all the loan options available from state programs, the Federal Housing Administration loans, Department of Veterans Affairs and the United States Department of Agriculture rural home loans.
   Learn about the advantages of different programs and the options for buying down your interest rate or rolling closing costs into your loan.
3. Find the right realtor.
   Finding the right real estate agent is probably one of the most important steps for first-time homebuyers. You need someone you can trust – someone who knows the market and who can guide you through the home buying process. A good realtor can offer advice about where to buy, how much to pay, what a good offer will look like. They will also be able to tell you what the market in your area is doing.

If you’re thinking about start your first home search, contact the mortgage experts at Mortgage Solutions Financial. Our experienced staff can help you get started and guide you through the home buying and preapproval process.

In a market like this, it’s no wonder that people are eager to invest in real estate. Foreclosure sales are full and cheaper properties sell fast. If you’re in the market for an investment property, there are a few things you should know. Getting a loan can be a little more challenging than your home mortgage was.

1. Loan terms are tougher for investors.
   Homeowners are much more likely to fight to keep a house than an investment opportunity if they come upon hard times. Because of that, investor loans are riskier and come with less favorable terms.
2. 20 percent down.
   You will not be able to get private mortgage insurance for an investment property. Because of that, lenders require buyers to put at least 20 percent down on a property before they will make a loan.
3. Interest rates.
   Since investor loans are riskier than home mortgages on primary residences, lenders generally charge higher interest rates on investor loans. You can expect to pay 0.25 to 0.75 percentage points more on an investment loan than on your home mortgage.
4. Security.
   A lot of lenders require proof that you have enough money saved to be able to afford home repairs and a certain number of months without a renter – usually six months.

How to get an investor loan.

It’s important you pick the right mortgage company for an investor loan. Not all lenders and mortgage companies work with investors. Make sure you find one familiar with investor loans as they can be far more complicated than home mortgages.

Contact the mortgage experts at Mortgage Solutions Financial. We have decades of experience helping investors borrow the money they need to grow their real estate portfolios.

That’s why you need to ask questions and understand what goes into refinancing costs and how to decide whether or not you really want to refinance. There are no stupid questions when it comes to refinancing your home loan.

Don’t be shy

You can’t ask too many questions when it comes to researching refinancing options. There are a lot of programs out there and refinancing is a complicated process. Make sure you understand it before you move forward.

Refinancing questions to consider

How long do you want to live in your home? If will just be there a few years, refinancing might not be worth it. Closing costs are usually significant enough that it will take at least couple years for the savings you realize from refinancing to make up for the expense.

Pick a good lender or mortgage company

Be wary of lenders or mortgage companies that offer much better interest rates than everyone else you talk with. Rates are usually pretty standard across the board, so a rate that sounds too good to be true, probably is.

Make sure you can talk to your mortgage broker and ask questions without feeling judged.

Ask about refinancing programs

The federal government has created several streamline refinancing programs designed to make it easier for homeowners who owe more than their properties are worth to refinance.

Ask your mortgage company about what kinds of refinancing programs are available and how they all work. A good mortgage expert should be able to tell you about all the options and help you decide which would be best for you.

If you have questions about refinancing your mortgage and contact the mortgage experts at Mortgage Solutions Financial. We’ve helps tens of thousands of families finance and refinance their homes and would be happy to share our knowledge with you.

With today’s record-low interest rates, many borrowers could realize significant saving. If your credit score has also improved, the savings could be even bigger.

Of course, refinancing is not right for everyone. Before you even look into the details of refinancing, you will want to weigh the benefits and costs. Refinancing is not free. You will generally have to pay closing costs. If you don’t plan to own your home for long, those costs might not be worth it.

Getting your credit score -

Mortgage companies typically get credit reports from all three credit reporting bureaus when someone applies for a home loan. You can get your credit report from the agencies – Equifax, Experian and TransUnion – as well, but you will usually have to pay if you want to see your score. The lender you’re working with will usually share your report, including the score, with you.

How lenders use your credit score -

Scores of 620 and lower are generally considered to be subprime. Borrowers with low scores like that usually have something in their credit history that reflects negatively on their likelihood to repay debt. It could be a history of missed or late payments, collections notices or a high debt-to-income ratio.

Borrowers with low credit scores are typically offered higher interest rates because they pose a greater risk to the lender.

Borrowers with a score of 760 or greater are in the top tier of borrowers and will usually have access to the best loan terms and lowest interest rates. They get these favorable terms because they are judged to be a lower risk to the lender and more likely to pay their loan on time.

How scores impact rates -

If your home loan is $170,000 and you have a subprime credit rating, you would have qualified for a 4.65 percent interest rate on Nov. 21 for a 30-yeard fixed-rate mortgage, according to bankrate.com. That would make your monthly payment $876 for principal and interest. If your credit score is high, you could have qualified for a 3.44 percent interest rate on the same date. That would male your payment $758 – saving you $118 a month.

That’s nothing to laugh at. That’s real money. And you’d save even more over the life of your loan.

Refinancing -

Refinancing could make a lot of sense for you if your credit has improved, especially if you bought your home when rates were higher in general. Contact the mortgage experts at Mortgage Solutions Financial for more information about how your credit score can impact your mortgage rate and how to take advantage of today’s record-low rates.

For a long time, families that owed more on their mortgages than their homes were worth couldn’t refinance. Fortunately, the Federal government responded with several programs to help underwater borrowers.

FHA Streamlined Refinancing

If you purchased your home with an FHA loan, you’re in luck with this program, which will enable you to refinance without an appraisal or full credit report. Mortgage companies can use the previous loan amount as the property value for underwater mortgages as long as the borrowers:

• Closed on the loan before June 1, 2009
• Are current on payments
• Have made all payments within the month due (if the mortgage has less than a 12-month payment history)
• Had no more than one 30-day late payment in the preceding 12 months and made all mortgage payments within the month due for the three months prior to the date of the new loan If the mortgage with a 12-month payment history or greater
• Have not refinanced within the last 210 days
• The refinancing reduces monthly payments or provides some net tangible benefit to the homeowner
• The loan balance does not increase to cover closing costs

HARP

The Home Affordable Refinancing Program enables homeowners with conventional mortgages to refinance even if they owe more than their home’s current market value as Fannie Mae bought the loan. Since Fannie Mae has bought millions of mortgages, many homeowners will find they qualify. Fannie Mae could own your loan even if you’re making payment to a different bank, like Wells Fargo.

You can use HARP to refinance an underwater mortgage as long as you meet this criteria:

• Fannie Mae owns your loan
• It was sold to Fannie Mae before May 31, 2009
• The mortgage hasn’t previously been refinanced under HARP
• The borrower is current on payments
• The borrower has reasonable ability to pay the new loan
• The refinancing improves long-term affordability

VA Interest Rate Reduction Refinancing Loan

If you bought your home with a VA loan, you can use this program from The Department of Veterans Affairs to refinance an underwater mortgage. It’s designed to make it easier and more affordable for veterans to refinance their VA loans. You will not have to provide paperwork for income and assets or an in-depth credit report. Mortgage companies can use your home’s initial sales price as its current value as long as you meet this criteria:

• You originally financed the home with a VA loan
• You currently or previously occupied the home
• You do not increase the loan amount to pay any other debts

If you have any questions about how you can refinance your underwater mortgage using one of these government programs, please give the mortgage experts at Mortgage Solutions Financial a call. Our knowledgeable experts can help you decide which option will work best for you and identify programs not listed here that could also be a good fit.

Who

The seller and seller’s agents will not be at this closing this time. But among the players you can expect to see on closing day for your refinanced loan are:

• Your mortgage broker
• A closing agent from a title company
• Yourself
• And any representation you bring with you
• In some states, there could also be legal counsel for the lender at the table

What you will do

Closing a refinanced loan is generally a pretty quiet process involving a lot of paper shuffling. Most of what you do will be the same thing you did when you closed on your original loan. You will:

• Review and sign loan documents
• Provide proof of homeowners insurance if you haven’t already established it in an escrow account
• Provide a cashier’s check for fees and escrow

The important stuff

Among the paperwork you will see and sign, these are the most important pieces:

• The deed of trust: This is your mortgage. It documents that the lender has a lien on your property and can foreclose on it if you fail to pay.
• Promissory note: This is your I-O-U to the lender. It’s usually just one page that says what you owe on the property and what the terms of your loan are.

It’s important to work with a mortgage company and a broker you feel comfortable with when refinancing. Closing on a refinanced loan can go quickly and there’s a lot of paperwork to review. Contact the mortgage experts at Mortgage Solutions Financial if you have questions about closing or want someone you can trust to guide you through the process.

What’s included in closing costs?

Nearly all mortgage companies will charge an origination fee of about 1 percent of the loan, which is how they cover expenses and pay your broker. Look out for bigger fees than that. Beyond that, there are a lot of third-party charges ranging from escrow for taxes and insurance to title insurance and city, county and state transfer fees and filings.

Here are a few tips for helping you identify a good mortgage company based on closing costs and tricks to help you decide if the costs are fair.

Good faith estimate

Before you commit to a lender, the mortgage company should be able to provide you a custom good-faith estimate based on the specific property you’re buying, the tax rate, estimated costs of homeowner’s insurance and your credit score and income.

If a mortgage company can’t provide a custom good-faith estimate in a timely manner, keep looking for a company that will let you know what to expect ahead of time.

Reputation and longevity

When it comes to trusting your mortgage company, it helps if it’s a company that has been around a long time with a lot of feedback written about the company and its lending officers online. Be wary of fly-by-night startups.

Look at smaller fees

Some fees for things like filing paperwork with the county assessor or trustee will be standard and you can find them on government websites. If you know the fee is $20 and your mortgage company is charging you $60, it’s not a good sign.

Interest rate

Most of the time, your interest rate will be relatively standard from one lender to the next. If you find a mortgage company offering a better interest rate, make sure you find out what its closing costs will be. They could be so high it negates the benefits of the lower interest rate.

No closing costs

Conversely, some lenders offer “no-cost loans.” There’s no such thing. If you do not have to pay closing costs, the mortgage company is probably offering you a slightly higher interest rate in order to recover their expenses. If you plan to own the home for more than a couple years, “no-cost” loans generally cost more in the long run.

If you want to know the closing costs are fair, it pays to do some research, but also to work with a reputable and established mortgage company. The experts at Mortgage Solutions Financial have been in the business a long time and will always be available to answer your questions and guide you through the process.