Mortgage

Could You Get Denied for Mortgage After Pre-Approval?

February 1, 2021 By Vicky Monroe Leave a Comment

If you were denied for a mortgage after being pre-approved, you’re probably feeling confused and disappointed.

Many people think that getting pre-approved means they’re all set to buy their dream home. But getting pre-approved is just the first step in the lending process—it doesn’t guarantee you a home loan.

If your financial situation changes or the property doesn’t appraise for the full purchase price, your application can still be rejected.

Here are some of the most common reasons buyers are denied for mortgages after pre-approval and some tips to help you move forward after a rejection.

Why Was I Denied for Mortgage After Pre-Approval?

Getting pre-approved for a mortgage is better than getting pre-qualified because your finances are reviewed more thoroughly. Lenders ask you about your income, assets, and debt, and require you to provide documentation to back it all up.

But even after that thorough review, issues can still arise if your financial situation changes. If you lose your job or your credit score drops, you may not meet your lender’s standards anymore.

That’s why you need to be careful with your finances between pre-approval and closing. You shouldn’t take on new debt, make big purchases, switch jobs, or do anything that could be a red flag to your lender.

In some cases, your mortgage denial may have nothing to do with your financial situation.

Mortgage applications can be rejected if the property doesn’t appraise for the full purchase price. Lenders won’t give you a loan for more than your property is worth, so you won’t be able to close on your home if it doesn’t appraise well.

If you’ve been denied for a mortgage but you’re still not sure why, here’s what to do next.

What to Do Next After Being Denied for Mortgage

The first thing you should do after being denied for a mortgage is ask your lender why. Your loan officer may have insight into why your application was rejected, which can help you improve your finances before you reapply.

It’s also important to keep in mind that every lender has different requirements. Even if one lender denied you, it may still be possible to get a mortgage through another financial institution.

Try shopping around and see if other lenders or loan programs have more flexible requirements. However, make sure that you’re not racking up too many hard inquiries on your credit report, which can cause your credit score to go down.

Getting a cosigner may also help bolster your mortgage application if you can’t qualify on your own, so that’s another avenue to explore.

Wrapping Up

Being denied for a mortgage is disappointing, especially when it happens later in the process after you’ve been pre-approved.

But getting denied doesn’t mean you’ll never be able to get a mortgage. You can find out why your application was rejected, improve your finances, and apply again in a few months.

You may even be able to add a cosigner to your loan or find a lender with more flexible requirements that will give you a mortgage now.

Syracuse Mortgage Loan-Tips For Paying It Off Faster

February 7, 2020 By Alexa Mason Leave a Comment

A lot of people own their house outright. While some purchase their homes by paying cash, there are others who have no choice but to get a mortgage loan to buy the home of their dreams.

If you are one of those who need to take out a mortgage loan to finance the home you want to buy, you might worry about paying it off. Well, you don’t have to get tied up with your mortgage loan for a long time. There are a few ways on how to pay it off quickly that you should know about. You can start here by considering the following tips:

Make an Extra Payment for the Principal

One of the best Syracuse mortgage loan tips you can consider to pay it off faster is to make an extra payment for the principal. The majority of mortgage lenders will let you make extra payments and consider it as principal only. It means that your payment will go to paying down the principal instead of your loan’s interest and principal.

If you pay a bit of extra principal in your mortgage loan, it will save you lots of interest charges. In addition to that, it will get you out of the loan a few years ahead of the original schedule. Thus, considering extra principal payment can make a huge difference in paying your mortgage loan faster.

Prioritize Your Home Loan

Another tip to pay off your mortgage loan fast is to tighten your belt on other less important expenses. It is never too late to budget-start your month. It will help you increase your savings over time. You should also ensure that your household services like the internet or electricity are worth paying for. The reason behind it is that there is no point spending money on some things you do not really need. It is also a waste of money if you overpay for the things you do. So, always determine where you can make cuts and use your extra money to make payments on your mortgage loan.

If you prioritize your mortgage loan, you will just wake up one day that you are debt-free and enjoying your home without thinking about mortgage payments.

Consider Downsizing

Downsizing your home might be a drastic step for some homeowners. However, if you really want to get rid of your mortgage loan as soon as possible, it is beneficial to sell your bigger house and use the profits to purchase a less expensive and smaller home.

Use the profits you get from selling your big house and you might be able to pay for your new home cash. But, even though you need to get a small mortgage, it still means that you have reduced your debt. Your next goal should be getting rid of your remaining debt quickly. Well, if you have a small balance, it is never impossible.

Round-Up Your Balance

Make it a habit to round up your balance when paying your mortgage. For instance, if you need to pay $1,578.92, why not round it up and pay $1,600 instead? The extra money you paid from rounding up your balance can be used to reduce your payment next month or you may just use it to pay for the principal. As mentioned above, paying extra for your loan’s principal will help you pay off your mortgage quickly.

Consider Mortgage Refinancing

One of the ways to pay down your mortgage more quickly is to get a new loan for mortgage refinancing. It may help you reduce your debt in various ways. In fact, mortgage refinancing may lessen the interest rate, which can help you enjoy savings.

Homeowners may also refinance for a short term to get rid of mortgage quickly. Although monthly payments are higher with a short-term loan, you will be able to enjoy reduced interest costs. Those with FHA or Federal Housing Administration loans may eliminate PMI or private mortgage insurance if they are used to refinancing conventional loans. The insurance on a conventional mortgage may be dropped if someone has twenty percent equity in their property. Money used for the premiums may be diverted to the loan’s principal to speed up repayment.

Conclusion

It is not impossible to pay off your mortgage loan faster. The only thing you should do is to follow those tips mentioned above. Once you have done it successfully, there are some benefits you can enjoy from paying your mortgage loan faster. Aside from reducing your debts, it can also give you peace of mind, which is priceless. So, if you are ready to lessen your financial woes, don’t hesitate to implement those tips and see the difference. If you are confused and need more information about paying your mortgage loan, make sure to seek professional help.

Buying a House? A Credit Union Mortgage Might Be Best

June 25, 2019 By Kathryn Vercillo Leave a Comment

You have so many different options for banking today. In addition to traditional banks, there are online-only banks. You can invest with robo-advisors and apps. If you need money, you can get a personal line of credit or set up a Go Fund Me account. With so many options available, it can be difficult figuring out what the best choice is at any given time. If you’re looking for a home mortgage, then you might want to consider going with a credit union. They’re almost always cheaper than a traditional bank for mortgage loans.

What is a Credit Union?

A credit union is a type of bank. However, a regular bank is owned by a company or corporation. For example, Wells Fargo and Bank of America are regular banks.

In contrast, a credit union is a co-op. When you join a credit union, you become a member who partially owns the credit union. Therefore, credit unions tend to work harder than traditional banks to secure the best options for their members. After all, the members themselves own the bank.

Credit unions historically served particular groups of people. For example, there are firefighter’s credit unions and teacher’s credit unions. However, today, you can find a credit union for just about anyone. For example, San Francisco Credit Union is open to any resident of the city.

You Get More and Pay Less at a Credit Union

A traditional bank is a for-profit company. In contrast, a credit union is non-profit. As a co-owner of the bank, the extra “profits” or benefits go back in your own pocket. Therefore, you get better rates and lower fees when you use a credit union instead of a traditional bank.

In terms of rates, you get more interest. For example, if you open a savings account at a bank and open another at a credit union, you’ll most likely discover that you earn more interest on the credit union savings account.

In terms of fees, you often find that you aren’t charged for things at a credit union that a typical bank would charge you for. ATM fees, overdraft fees, and similar charges are often not a problem at credit unions. Of course, each credit union is different, so you’ll always want to check the terms of your own account. Don’t assume anything. Generally speaking, though, you’ll pay less and earn more when banking with a credit union.

People Choose Credit Unions for Loans

Although there are benefits to opening a checking/savings account with a credit union, the real reason that people opt for credit unions is often because of the loans.

First of all, if you’re already a member of the credit union, then loan approval usually happens very quickly. You can apply to become a credit union member just to get a loan. However, you’ll have the best luck if you’re already a member. Therefore, if you know that you’ll need a loan in the near future, you might want to set up a checking and/or savings account with the credit union first.

More importantly, credit unions often offer the best rates for loans. If you were to apply for a loan through your regular bank and also apply for one through your credit union, chances are that the interest rate would be a lot lower on the latter than the former.

In other words, you can borrow money more easily from a credit union, and you won’t have to pay back as much in interest. Of course, your credit history will still play a role in the decision process for a loan. However, your credit union will also consider other factors, which your regular bank may not. They’re more people-friendly and consider different human circumstances. Therefore, if you have irregular or non-traditional income, a higher-than-average debt-to-income ratio, or some other credit history quirk that would cause another bank to turn you down, then you might have better luck with a mortgage company.

Get Your Mortgage Through a Credit Union

You can get any number of different types of loans through a credit union. However, it’s an especially good choice for people who need to get a mortgage. After all, a mortgage is probably the most significant loan you’re ever going to get. When you’re taking out that money, to be repaid over such a long period, it’s critical to get the best rate possible. You’ll find better rates at your credit union than through a regular bank.

The most important difference is the interest rate. When you’re taking out such a huge loan, even a small percentage difference can make a huge impact on how much you end up paying overall. But that’s not the only way you’ll benefit when you get your mortgage through a credit union. You might also find that your closing costs are significantly cheaper. When you work with a traditional bank (or a mortgage bank), you work within a system that’s designed to rack up the fees. When you get your mortgage through a credit union, you work within a system that’s designed to give you the best rates.

Plus, you get the personal touch that banks just don’t offer. When you buy a house, especially for the first time, it’s a really huge decision. It’s confusing. You will probably have a lot of questions. And while you can certainly get many questions answered by your real estate agent, it also helps to have your financial team on your side. Your credit union will go the extra mile to provide customer service that helps you understand each step of the process, what your options are, and how to make the best decisions as you buy your home. They’ll also help you with funding a non-traditional home that other banks might turn their noses up at. Good place to start looking is here.

A Mortgage is a Long-Term Relationship

No matter how long you have an account at a regular bank, it usually feels like an impersonal service. In contrast, you truly build a relationship with your credit union over time. This is particularly important as a homeowner. Inevitably, you’re going to need some additional financial help for your home. Perhaps ten years down the line you’ll need to replace the roof. Maybe you’ll grow your family and want to add on to the home. Or maybe you’ll just need money for something else, and you’ll want to refinance your home to get that cash. Whatever the reason, you’ll have a better chance of getting a great home-related loan if you’ve established a relationship with your credit union over the years. Getting your home mortgage with them and paying it off consistently is a great way to establish that relationship.

Plus, your credit union is likely to stick with you throughout the loan. Many traditional banks sell and re-sell their loans over time. As a result, you might start out sending payments to one company only to find a few years later that your checks need to go somewhere else. While that’s usually not a big deal, it can feel like a hassle when it happens. Things can go awry. Moreover, you can really start to feel like you don’t know who’s dealing with your money. You don’t have those issues when you work with a credit union, which is typically unlikely to sell your mortgage.

When to Refinance a 15 Year Mortgage to a 30 Year Mortgage

April 25, 2019 By Tamila McDonald Leave a Comment

Refinancing your mortgage can provide you with a range of benefits. If you manage to score a lower mortgage refi interest rate and aim for a similar term, saving thousands of dollars over the life of your loan could be possible, depending on your existing principle.

The decision to refinance a 15-year mortgage to a 30-year mortgage usually isn’t about financial gain. Typically, 15-year mortgages have better interest rates. Plus, a 30-year mortgage, at a minimum, doubles your repayment term, so you are almost guaranteed to spend more in interest before you pay it off.

However, that doesn’t mean refinancing to a 30-year mortgage is always a bad idea. A 15-year mortgage offers stability but the monthly payments are much higher than that of a 30-year loan due to the shorter term. So if you plan to stay put for several years 30-year mortgage might be a better option for you.” said a mortgage expert working at a mortgage provider in a rapid city.

Lower Monthly Payments

When you extend the length of the repayment timeline, your monthly payments are typically lower. For example, if you refinance $200,000 in principle over 30 years with a 4 percent interest rate, your monthly payment would be around $955. That same amount and interest rate on a 15-year loan would have a monthly payment of $1,479. That’s a difference of $524 a month.

Even if the 30-year loan came with a 5 percent interest rate, the payment on a $200,000 mortgage would be $1,074. That’s still $405 less than a 15-year loan for the same amount at 4 percent.

If you are struggling to make the larger payments associated with a 15-year loan, refinancing to a 30-year term could relieve some of the burden. Your monthly payments could be dramatically smaller, suggesting the interest rate you qualify for is similar to your existing 15-year loan.

Higher Total Cost

While your monthly payment on a 30-year loan would be smaller, the total cost is significantly higher. Using the same $200,000 mortgage as an example, having a 15-year loan at 4 percent interest, the total you would pay over the life of the loan is $266,288.

In comparison, a 30-year loan with the same interest rate runs $343,739 over the life of the loan. You’d pay $77,451 more using this approach than sticking with a 15-year mortgage.

A 30-year loan with the 5 percent interest rate is even worse, costing you $386,510 over the life of the mortgage. That means this 30-year loan costs you $120,222 more in the end, suggesting you stick to the original payment schedule.

Other Factors

There may be other factors that impact how much refinancing could benefit you. For example, if your current loan has PMI, but you now have at least 20 percent in equity, a refinance could allow you to rid yourself of that extra cost. This applies whether you refinance into a new 15- or 30-year loan.

If your current 15-year mortgage monthly payments are only unaffordable because of PMI, refinancing into a new 15-year loan could allow you to experience a reduced payment without the drawbacks of an extended term, suggesting you can get the same interest rate.

Additionally, if you are in a 15-year adjustable rate mortgage, refinancing could allow you to get a fixed interest rate instead. While switching to a fixed rate means you wouldn’t automatically benefit if interest rates fall, it also keeps your interest rate from climbing. This approach provides a level of stability that makes it easier to budget for your payment. You know exactly what you need to pay and when which is often better for budgeting.

When to Refinance a 15-Year Mortgage to a 30-Year Mortgage

Ultimately, whether refinancing into a longer term is a smart move depends on your unique situation. In most cases, refinancing to a 30-year mortgage means a lower monthly payment but practically guarantees that you will pay more in interest over the life of your loan.

However, if you choose a mortgage that does not come with a prepayment penalty, you can offset some of the difference if your financial situation improves. For example, you can make extra payments toward the principle when you have the opportunity, reducing the amount of interest you’ll pay over the remainder of the loan.

Similarly, if freeing up some money each month means you can avoid or pay down credit card debt (which usually comes with much higher interest rates compared to mortgages), you might come out financially ahead overall. This could apply even if refinancing into a 30-year mortgage means having to take on a higher interest rate than you had with your 15-year loan, suggesting that the new mortgage interest rate is lower than what you have on your credit cards.

As of April 2019, the average interest rate on a 30-year fixed mortgage was about 4.3 percent. In comparison, the average credit card APR is about 17.5 percent. That’s a 13.2 percent difference.

Deciding When to Refinance Your Mortgage

If you are trying to decide, take a look at your entire financial picture first and foremost. Examine all of your current interest rates and determine if you could pay off high-interest debt faster if your refinance. It may also be wise to craft two versions of your budget, one reflecting your current situation and one based on your possible mortgage payment if you refinance, to give you a better idea of how your financial life would compare.

In the end, the choice is yours. But, by using that approach, you can better assess the pros and cons based on your unique situation.

Have you ever refinanced a 15-year mortgage to a 30-mortgage? What about the other way around? Tell us why in the comments below.

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How the Government Shutdown Impacts Your Mortgage

January 14, 2019 By Amanda Blankenship Leave a Comment

The partial federal government shutdown has complicated life for thousands of Americans and now it has begun to complicate things for homeowners and homebuyers as well. Those looking to get an FHA, VA, or USDA loan can expect delays. Not to mention, if you are one of the 800,000 employees affected by the shutdown, you may have trouble making a house payment.

How the Government Shutdown Affects Homebuyers

The U.S. Department of Agriculture announced it isn’t approving any new USDA loans during the government shutdown. This has the potential to impact tens of thousands of Americans.

In general, people looking for home loans through the United States government will see delays of up to two weeks. However, many industry leaders are still conducting business-as-usual. A survey was taken by a group of 2,211 members of the National Association of Realtors. Around 75 percent of those who responded to the survey said the shutdown hasn’t had an impact on any closings.

The numbers are telling a different story though. Around 25 percent of Realtors said buyers have decided not to go through with a home purchase simply because of economic uncertainty. About 9 percent of Realtors had a client decide not to buy a home because of lost income due to the government shutdown. On top of that, 17 percent said closings were delayed awaiting USDA loans, 13 percent have been delayed because of IRS income verification issues, 9 percent have seen delays in FHA loans, and another 6 percent have seen delays with VA loans.

Support staff at the VA and Department of Housing and Urban Development are unavailable during the shutdown. While the processing of these loans will continue, you will likely have to wait longer than usual. Because workers are not readily available, there is no good estimate of how long the wait might be.

How the Government Shutdown Impacts Homeowners

U.S. government employees experience the effects of the shutdown the most. As many news outlets point out, these employees aren’t receiving paychecks at this time and some aren’t able to pay their bills on time. If this is the case, be sure to contact your loan servicer and explain the situation. The loan provider should be able to provide payment arrangements and alternatives.

Forbearance. One option for government employees without an income during the shutdown is forbearance. This is a type of payment arrangement that helps homeowners during financial hardship. Forbearance is typically granted on an individual basis.
Short-term loans. Although no one really wants to take on additional debt, taking out a short-term loan could prevent you from falling behind on your mortgage. The Navy Federal Credit Union is offering zero percent APR loans for federal employees and active-duty members of the Coast Guard who usually have direct deposit.
Communicate! Overall, communicating with your loan provider is the most important thing to do if you are fearful of falling behind. Speaking with them and keeping communication open can keep your credit score from suffering while you’re out of work.

Mortgage Rate Lock During the Shutdown

If you have been considering buying a home but the government shutdown is making you nervous, you may want to hurry up and lock down the current rate. When the shutdown began on December 22, mortgage rates fell. Although the shutdown is causing problems for many, this is the one instance it could benefit you. Homebuyers have the chance to lock down the current mortgage rate (even if they aren’t able to close until the shutdown is over).

“Our expectation is that this will be a short-term blip and you’ll be glad if you were able to take advantage of the drop in mortgage rates,” said Danielle Hale, chief economist for Realtor.com. The current rates are likely to rise later this year.

Readers, how does the government shutdown affect you? Let us know in the comments below.

Homeowners’ Credit Scores Recover Fastest in These Cities

November 11, 2018 By Amanda Blankenship Leave a Comment

If you’re a first-time home buyer, it is likely no one has told you about the serious hit your credit will take in the weeks following the sale. Although you need decent credit to buy a home, homeowners’ credit scores decline due to the significant amount of debt added to their report.

While each mortgage payment you make will help increase your score, it has been noted that the rate in which homeowners’ credit scores recovered heavily depended on where they live. New homeowners saw an overall decline between 15 and 40 points. On average, it took 11 months for their credit score to fully recover. If you are concerned about your credit recovery period, here are five cities where homeowners reported a faster recovery.

Richmond, Va.

Richmond, Va. residents saw their credit scores decline by about 13 points after they took out a mortgage. It took between eight and nine months (266 days) for their credit scores to recover. The average credit score for homeowners in Virginia is 693.

Minneapolis

The average credit score for homeowners in Minneapolis sits around 701. Overall, people who took out a mortgage saw a smaller decline than residents in Richmond (11 points). However, it takes one day longer, on average, for a homeowner’s score to fully recover.

Salt Lake City

Folks who buy a home in Salt Lake City tend to have a credit score around 704. After they take out a mortgage there is a decline of 15 points, on average and it takes about 272 days for their credit to recover.

Providence, R.I.

Providence residents saw a 12-point drop after taking out a mortgage in the city. Most saw a full recovery in just 275 days though.

New Orleans

New Orleans is amongst the cities with the fastest recovery time as well. It takes just 280 days for a homeowners’ credit score to recover in the city.

Where Homeowners’ Credit Scores Recovered Slowest

You may notice that each of the cities listed above takes less than the average 11 months for a homeowner’s score to fully recover to their pre-mortgage rating. Not every city is like that though. In fact, credit score recovery may take over a year in some places. Here are the cities where homeowners’ credit scores have recovered the slowest.

Riverside, Calif., 375 days.
Austin, Texas – 377 days
Milwaukee – 385 days

Readers, when you bought your home, how long did it take for your credit score to recover?