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6 Ways Home Buyers Mess Up Getting a Mortgage

Getting a mortgage is, by general consensus, the most treacherous part of buying a home. In a recent survey, 42% of home buyers said they found the mortgage experience stressful, and 32% found it complicated. Even lenders agree that it’s often a struggle.

A lot can go wrong, says Staci Titsworth, regional manager at PNC Mortgage in Pittsburgh.

If you’re out to buy a home, you have to be vigilant. To clue you into the pitfalls, here are six of the most common ways people mess up getting a mortgage.

Related Articles

  • What Is a Mortgage? Your Go-To Guide to Getting a Home Loan
  • Mortgage Pre-Qualification vs. Pre-Approval: What’s the Difference?
  • Is a Mortgage Pre-Approval Letter Necessary to Make an Offer on a House?

    Waiting until you can make a 20% down payment
    A 20% down payment is the golden number when applying for a conventional home loan, since it enables you to avoid paying private mortgage insurance (PMI), an extra monthly fee of 0.3% to 1.15% of your total loan amount. But with mortgage rates where they are todayin a word, lowwaiting for that magic 20% could be a huge mistake, since the more time passes, the higher mortgage rates and home prices may go!

    All of which means it may be worth discussing your home-buying prospects with lenders right now. To get a ballpark figure of what you can afford and how your down payment affects your finances, punch your salary and other numbers into a home affordability calculator.

    Meeting with only one mortgage lender
    According to the Consumer Financial Protection Bureau, about half of U.S. home buyers only meet with one mortgage lender before signing up for a home loan. But these borrowers could be missing out in a big way. Why? Because lenders’ offers and interest rates vary, and even nabbing a slightly lower interest rate can save you big bucks over the long haul.

    In fact, a borrower taking out a 30-year fixed rate conventional loan can get rates that vary by more than half a percent, the CFPB has found. So, getting an interest rate of 4.0% instead of 4.5% on a $200,000, 30-year fixed mortgage translates into savings of approximately $60 per month, or $3,500 over the first five years.

    So to make sure you’re getting the best deal possible, meet with at least three mortgage lenders. Youll want to start your search early (ideally, at least 60 days before you start seriously looking at homes). When you meet with each lender, get what’s called a good-faith estimate, which breaks down the terms of the mortgage, including the interest rate and fees, so that you can make an apples-to-apples comparison between offers.

    Getting pre-qualified rather than pre-approved
    Mortgage pre-qualification and mortgage pre-approval may sound alike, but theyre completely different. Pre-qualification entails a basic overview of a borrowers ability to get a loan. You provide a mortgage lender with informationabout your income, assets, debts, and creditbut you don’t need to produce any paperwork to back it up. In return, youll get a rough estimate of what size loan you can afford, but it’s by no means a guarantee that you’ll actually get approved for the loan when you go to buy a home.

    Mortgage pre-approval, meanwhile, is an in-depth process that involves a lender running a credit check and verifying your income and assets. Then an underwriter does a preliminary review of your financial portfolio and, if all goes well, issues a letter of pre-approvala written commitment for financing up to a certain loan amount.

    Bottom line? If you’re serious about buying a house, you need to be pre-approved, since many sellers will accept offers only from pre-approved buyers, says Ray Rodriguez, New York City regional mortgage sales manager at TD Bank.

    Moving money around
    To get pre-approved, you have to show you have enough cash in reserves to afford the down payment. (Presenting your mortgage lender with bank statements is the easiest way to do this.) Nonetheless, your loan still needs to go through underwriting while you’re under contract for your loan to be approved. Because the underwriter will check to see that your finances have remained the same, the last thing you want to do is move money around while youre in the process of buying a house. Shifting large amounts of money out or even into your accounts is a huge red flag, says Casey Fleming, mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage.”

    So if you’re in contract for a home, your money should stay put.

    Applying for new lines of credit
    If you apply for a new credit card or request a credit limit increase a few months before closing, watch out: Credit inquiries ding your credit score by up to five points. So, dont let the credit inquiries add up.

    “Worse than the actual hit on your credit score is any pattern of trying to borrow more money all at once, says Glenn Phillips, CEO of Lake Homes Realty. Translation: Applying for multiple lines of credit while youre buying a house can make your mortgage lender think that youre desperate for moneya signal that could change your mortgage terms or even get you denied altogether, even if you’ve got a closing date on the books.

    Changing jobs
    Mortgage lenders like to see at least two years of consistent income history when pre-approving a loan. Consequently, changing jobs while youre under contract on a property can create a big issue in the eyes of an underwriter.

    Your best bet? Try to wait until after you’ve closed on your house to change jobs. If you’re forced to switch before closing, you should alert your loan officer immediately. Depending on the lender, you may simply need to provide a written verification of employment from your new employer that states your job status and income, says Shashank Shekhar, the founder and CEO of Arcus Lending in San Jose, CA.

    For more smart financial news and advice, head over to MarketWatch.

    Daniel Bortz is a Realtor in Maryland, Virginia, and Washington, DC. He has written for Money magazine, Entrepreneur magazine, CNNMoney, and more.


New Listing! 4100 QUEEN EMMA DR #64

Kaiulani Villa in Princeville, Kauai

$799,000   2 BD  / 2.5 BA


Ka’iulani of Princeville is a newer award-winning, low-density, luxury residential community consisting of spacious attached homes. The basic design concept includes upscale design, finishes, and amenities for full time and second-home buyers with “above-the-ordinary” requirements. Detail to quality and extraordinary service with an on-site manager and concierge services. Lighted walking paths, 3 heated pools, 2 outdoor kitchens are a few of the gathering places homeowners enjoy at the prestigious Kaiulani of Princeville. Unit 64 has many special design features & upgrades: a full house water filtration system additional under counter water filters located in kitchen & dual master sinks upstairs Sub-Zero and Wolf built-in stainless-steel appliances: refrigerator, electric wall oven, electric cook top, microwave oven Fisher Paykell dishwasher MayTag Neptune Super Stack Washer/dryer & laundry sink Custom Aristocratic cabinets with slab granite countertops throughout Kohler and Grohe plumbing Assisted cooling (AC) Hand carved wooden leaf fans Custom wood railings Invisible screen door on back lanai and screen door on front door Plantation Shutters in both master bedrooms and Hunter Douglas Honey-coned blinds in living room & kitchen Fully furnished Entertainment system & wall mounted Sony TV and speakers 10 ft and sculptured vaulted ceilings with wall to floor windows that capture the east and north shore mountain ranges plus mesmerizing sunrises.


Existing-Home Sales Subside 0.6 Percent in June

Click for more on this article from NAR:

WASHINGTON (July 23, 2018) — Existing-home sales decreased for the third straight month in June, as declines in the South and West exceeded sales gains in the Northeast and Midwest, according to the National Association of Realtors®. The ongoing supply and demand imbalance helped push June’s median sales price to a new all-time high.

Condo sales, prices soar on Kauai in June

This article was written and published by Pacific Business News, please click her to see the live article:

Condominium sales jumped on Kauai last month, along with prices, while single-family homes posted a more modest price gain on flat sales, according to data from Hawaii Information Service on behalf of the Kauai Board of Realtors.

There were 71 condominium units sold in June, a 39.22 percent increase from 51 units sold during the same month last year. The median price of those condo units was $599,000, an increase of 39.3 percent from $430,000 in June 2017.

The median price of a single-family home on Kauai in June was $752,500, which was an increase of 7.12 percent from $702,500 during the same month last year.

The median price of single-family homes in the Hanalei district on Kauai’s North Shore, where flooding damaged dozens of homes and cut off access to others in Haena, was $1.01 million in June, a 16.12 percent decline from $1.2 million in June 2017. Sales in the area dropped to eight single-family homes sold in June, a 57.89 percent decline from 19 sales in June 2017.

Condominium sales in Hanalei, which includes Princeville, dropped to 10 units sold, a decline of 37.5 percent from 18 units sold during the same month last year. However, the median price of those units rose 17.74 percent to $624,000, from $530,000 in June 2018.