Information to help you be informed,
in the loop, and up to date.
Information to help you be informed,
in the loop, and up to date.
Getting a mortgage is complex and some people would rather get a root canal than go through the loan process. Good news for you – we LOVE doing our job and that makes getting a mortgage easier on you! We’ve compiled a few resources and tools to help you along the path.
Getting a mortgage can be complicated and there are a few things that can actually keep you from getting a mortgage, and that’s definitely a bad thing. We have compiled a list of do’s and don’ts to help guide you. Please note: If you have a unique situation, please contact us as soon as possible to make sure nothing will get in the way of you closing on your new home.
Things To Do
Communicate with your Loan Officer
Your Loan Officer is a personal advocate during the mortgage process. You will want to maintain an open, honest dialogue with them from application through funding. This helps alleviate surprises, allowing your lending professional to consider alternatives if need be.
Provide Supporting Documentation
The information given on your loan application must be supported by documentation and will be reviewed by a processor and an Underwriter.
The lending process can be confusing and at times seem that redundancies occur. Your Loan Officer is coordinating a transaction between multiple professionals and entities, all of whom have their own requirements and guidelines. Ask Questions.
Gift Funds For The Purchase Of Your Home
When accepting a gift to be used for your home purchase, you will be required to document the money. This involves proof of the source of funds, copies of the check, bank statements of both accounts, and a completed gift letter which your lender will provide.
Things NOT To Do
Shift Money Between Accounts
Account statements are collected to document available funds during your transaction. These funds are also verified prior to closing. Any major withdrawal or deposit will require additional documentation and may extend the time needed to close your loan.
Make Random Undocumented Deposits
We must make sure that the money in your account is yours and if not, the source must be documented. When making non payroll deposits into your account, you may need to provide a copy of the check and an explanation of the source of funds.
Apply For New Credit
Applying for credit can adversely affect your score even if you do not accept the offer. Each application for new credit will cause an inquiry to your credit report which will then have to be explained. Please consult your Loan Officer before any major purchase.
Purchase Major Items
A large payment such as a car lease can have a significant impact on your debt to income ratios and prevent you from qualifying for a new loan. Wait to buy those big ticket items until weeks after you’ve closed on your home.
Forget To Pay Your Bills
Moving can be a chaotic time. Don’t let the busy activity get in the way of paying your bills on time. One missed payment could have a negative impact on your credit and home loan.
Switch Jobs Or Pay Structure
Commissioned income must have a 2-year history before it can be considered. Quitting or changing jobs/companies can also make it hard to obtain home financing. Consult with your Loan Officer if this is a possibility.
Documents Needed from all Borrowers
Last 2 years Federal tax returns
Copy of Extension if applicable
Last 2 years W-2s
Paycheck stubs covering 30 days
If retired, provide benefit award letter, last 2 years 1099s
Rental income – provide mortgage statement and leases
K-1s for any business showing on Schedule E
2 years business returns if more than 25% ownership
P&L for any self-employment income/loss
Proof of business for schedule C self-employment
Business license or CPA letter
Last 2 months statement for any asset being used for funds to close or reserves
All pages – if it says page 1 of 6, then we need all 6 even if one is blank
If funds are coming from a gift then the following is required
Gift letter signed by all parties (we will provide form)
Copy of donor’s bank statement showing ability to give gift
Proof of transfer of funds
Wire confirmation or
Donor’s canceled check and proof of deposit into buyers account
If funds to close are coming from the sale of a home then the signed Closing Disclosure will be required by closing
Sale of assets
Proof of value
Proof of transfer of title or a bill of sale
Copy of driver’s license or passport
If you have obligations due to legal action (ie: child support) bring in judicial decree
Bankruptcy paperwork if less than 7 years since discharge
Name and number of homeowners insurance agent
Letters of clarification for credit inquiries
Other Letters of clarification may be needed
NOTE: Other items may be required. Not because we are nosy, bored or crazy… but because something you provided created an additional question and we have to leave no stone unturned for underwriting. Please be patient with us!!
This is the necessary part of mortgage finance. It’s where you can learn about the different loan options so that at your next neighborhood bbq, you will be the life of the party. “Hey Bob – did you know that USDA has a footprint? No, not that kind of footprint. Here, let me explain…”
Being sensitive to our digital space and your ability to focus on the subject matter; we’ve given you a brief snapshot of the loan programs we offer below. There are literally thousands of options, rules and just plain crazy that we can get into once we know a little bit more about your situation. Click here to ask a question!
Conventional loans can go up to $424,100 (SL, Tooele and Summit Counties is $600,300) and require at least 5% down (unless it is an investment property). The Conventional 3% down program is detailed below as it has much different requirements.
Less than 20% down requires Private Mortgage Insurance. This can be paid monthly, dropping off once you get to 80% loan to value; or upfront as a lump sum or as a higher interest rate. The mortgage insurance and interest rates are based on your loan to value and credit scores. Less down and lower credit scores will make your mortgage insurance and interest rate higher.
This program only requires 3% down payment and has lower mortgage insurance. You do not have to be a first-time homebuyer but there are income LIMITS. You are also required to take a homebuyer education course.
There are a couple of very unique things about this program. Funds to close can be cash on hand. Non-borrower household income can be used to help qualify, which means if Grandma is going to be living with you, her social security can be used to help qualify even though she isn’t on the loan. You can also use income from an accessory unit even if the home is not zoned multi-family.
Loans over $424,100 or above $600,300 in SL, Tooele and Summit Counties are considered Jumbo Mortgages. The interest rates can be higher and the rules are a little stricter. You are required to put at least 10% down. On some higher-priced homes, two appraisals are required.
You are required to have six months of payment in the bank in addition to your funds for closing. You may want to take a look at doing a first/second combo loan, keeping your first mortgage at the conforming loan amount with the second mortgage covering the difference.
FHA loans require 3.5% down payment and credit scores can be as low as 620. FHA has monthly and upfront mortgage insurance, but the interest rates are better than conventional loans with high credit scores; making this option attractive especially to those with low credit scores.
FHA appraisals are a bit stricter than conventional and may require repairs on things that pose a safety hazard. You do not need to be a first time homebuyer and there are no income limits. FHA has loan limits based on county; Utah County is currently $324,300 and Salt Lake County is $328,900. You can also purchase up to a 4 unit property as long as you will be living in one of the units. Loan limits are higher for 2-4 units.
USDA is available in certain areas or “footprint”. In Utah County, this is currently west of the Jordan River and south of the Spanish Fork River. There are income limits based on county and size of family. The income for anyone that will be living in the household must be counted even if that person will not be on the mortgage. USDA does not require that you be a first time homeowner, but you cannot own another home simultaneously.
If you have served in the military, military reserves or national guard then you are eligible for a VA loan. This is a 100% loan with very low interest rates. There is no mortgage insurance, but if you are not a disabled veteran then there is an upfront guarantee fee that is added to your loan.
The interest rates on VA loans are similar to FHA and very low, especially for those with lower credit scores. We can do VA loans down to 620 credit scores.
Utah Housing is zero down loan programs. There is a first mortgage and then a smaller second mortgage that covers the down payment and some of the closing costs and is at a rate 2% higher than the first mortgage rate. All of the programs have income limits based on county and family size.
You cannot rent out any part of the home or have a business in more than 15% of the home. The Utah Housing loan is more expensive, both in rates and fees than other loan programs, but can be a useful option for someone with no alternatives for their down payment.
“Bliss made our first time home buying experience truly amazing! She walked us through every step & explained things in a way that we understood. She was prompt at getting back to us, which made us feel like we were her only clients! She is excellent at her job & we wouldn’t want to work with anyone else.”
– Collin and Lani Lye