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Understanding Mortgages

What Does a Mortgage Closer Do?

After your loan is approved by the Underwriter, it moves to the Mortgage Closer. At this point the loan is approaching the finish line!

In this final step, the Mortgage Closer looks over all the paperwork to ensure the collected data is accurate, organized properly, meets state and federal regulations, and on track for the loan to be funded.

The Mortgage Closer coordinates the closing schedule with the title company and provides them with a settlement document for review and approval. Once they have given the okay, the Mortgage Closer provides them with the complete closing package which the buyer will sign at the closing. This package includes the final loan application, loan estimate and closing disclosure, title insurance documents, deed of trust, bill of sale, affidavit of title, and tax documents, among others.

Another responsibility of the Mortgage Closer is delivery of the final loan estimate and closing disclosure to the borrowers and real estate agents so everyone can review them prior to closing.  Resolving any issues as soon as possible is important to get the loan closed on time. 

Mortgage Closers are the communication center point between all parties involved in the transaction. While assisting the borrowers with the finishing touches on their loan process they answer questions, ensure everyone is on the same timeline, and keep everything moving forward according to plan.

The role of Mortgage Closer is important in making sure the mortgage process goes as smoothly as possible.

 

 


Understanding Mortgages

5 Major Myths About FHA Loans

With so much data available, it's truly a great time in world history to be in the market to buy a home.

Aside from the fact that interest rates are highly affordable - and have been that way for a number of years now - there’s a ton of information about the process of purchasing a house. Thanks to the internet, never before has so much information been so easy to discover.

Still, there’s also a tremendous amount of disinformation out there. It's true in just about every aspect of life, even when it comes to certain mortgage types, such as those backed by the Federal Housing Authority, which are more commonly referred to as FHA loans. Who knows the reason why, but it may be due to the fact that the program has been around  for so long - since the mid-1930s - and certain aspects of it have changed over the years.

Whatever the reason, if you're considering applying for an FHA loan, but aren't sure whether it's right for you due to mixed information, the following will help you set the record straight:

Myth No. 1: You need a sterling credit score to be approved

Everyone wants a high credit score. It gives you a greater number of options in terms of loan availability and can also help you borrow more.

But the notion that FHA loans require a perfect score is plain wrong. As noted by Forbes, people who have a credit score as low as 580 may still qualify for an FHA loan. Generally speaking, those with lower scores tend to pay more in terms of interest, but this isn't the same as eligibility.

Bottom line: You can have a very average credit score and still be extended an offer. Lenders take many different factors into account beyond only credit, such as what you earn, what funds you have available, how long you've been employed and several other financial considerations.

Myth No. 2: FHA loans are not available to self-employed people

The benefits of self-employment are innumerable, which may explain why 44 million workers in 2019 - nearly 30% of the country's workforce, according to Forbes - worked for themselves at one point or another during that 12-month period.

The ease with which self-employed people can obtain an FHA loan isn't one of those benefits, or so they say. As noted by FHA.com, while loan approval does tend to be a bit tougher, this reality is not unique to FHA loans. Many lenders have resources available at their websites, which provide details on what self-employed individuals should have with them to corroborate their financial ability. For instance, instead of a W-2 form, 1040 tax returns, must be obtained. These should include all schedules.

Your lender will want to see a few other items, but again, self-employment is not by any means a dealbreaker for FHA loan approval. Nor has that ever been the case. Just ensure that you have a paper trail, as transparency helps to increase communication and the understanding your lender needs to come to decision on what is right for you and your budget.

Myth No. 3: FHA loans are exclusive to single-family home purchases

Nothing could be further from the truth in this regard. While single-family residences are the most popular among buyers, you can apply and be approved for an FHA loan if you're interested in obtaining a condo. The same is true for multifamily units. Although housing starts fell in March and April due to the economic impact of the shutdown, multifamily permits actually rose by nearly 5% between February and March, according to the National Association of Home Builders.

Myth No. 4: You don't need mortgage insurance with an FHA loan

While some loan products don't require you to obtain mortgage insurance, an FHA loan does, despite what you may have been led to believe.

It's structured differently in terms of payment arrangement. For instance, in addition to paying the premium over time in a given year - usually on a monthly basis - there is also an upfront premium. This means a certain percentage of the policy is due at closing. The terms and conditions may differ, however, depending on the loan agreement.

Myth No. 5: FHA loans are only for first-time buyers

While there is truth to the notion that these mortgages are ideal for people who have never been in the market before, you can apply if this isn't your first purchase, too. They're also available to those who want to refinance their current loan.

This is hardly an exhaustive list, so if you have more questions, please let us know at RMS. We'll be happy to clear things up to separate fact from fiction.


Understanding Mortgages

What does an Underwriter do?

After your loan application has been checked over by your Loan Officer and Processor, it is ready to head over to the Underwriter for approval.

At this step, the Underwriter looks over all the documentation passed on to them to determine if the borrower is eligible to be granted the loan amount they applied for. They conduct a thorough credit analysis of the borrower’s finances, including employment records, income sources, and credit reports. In the end, they determine whether the financial ratios, like debt-to-income and loan-to-value, satisfy the requirements of the lender. If the Underwriter finds that the loan request should be altered for any reason, they work with the Loan Officer to find a new course of action.

There are four outcomes to the Underwriter’s decision on the approval of a loan:

  • Your application is approved, meaning your loan can move on to closing.

  • Your application might be deemed "approved with conditions," meaning your lender could require additional financial information, such as proof of insurance, marriage certificates, or tax forms.

  • Your application could be suspended, which might be the result of missing documents or the Underwriter’s inability to confirm your income or employment; you can reactivate your application by providing the missing details.

  • Your application could be denied because your finances did not meet the lending requirements, in which case you could reapply later once your finances have changed, or sometimes lowering the amount of the loan you applied for can help.

Underwriters have an in-depth understanding of the lending requirements along with federal rules and regulations and industry standards, so they know just what to do when it comes to any type of loan situation. An Underwriter is expected to pay close attention to detail, when it comes to analyzing loan applications and documents, to ensure everything has been evaluated correctly and the process can be as smooth as is hoped.

This important step in the mortgage process is there to help ensure that the mortgage loan you have applied to receive makes sense for you and your financial situation. It is both a protection for your mortgage lender and for you as a borrower. 


Understanding Mortgages

What does a Loan Officer Assistant do?

When you purchase a home, your first point of contact is most likely a Loan Officer, who will help you learn about your financing options, help you choose a mortgage that is right for you, and update you at key milestones in the mortgage process. Throughout your mortgage process, it is also likely that you could hear from a Loan Officer Assistant. But what exactly is a Loan Officer Assistant, and what are they responsible for when it comes to your loan?

Loan Officer Assistants have passed federal and state tests to be licensed to originate mortgage loans - the same tests and licensing, in fact, as your Loan Officer. A Loan Officer Assitant understands the mortgage loan and application process and is qualified to speak with you about your loan. It's often a Loan Officer Assistant (also referred to as an LOA) who will be the one to answer questions that you may have along the way and be your day-to-day resource.

LOAs are there for you from the beginning to the end of the mortgage loan process. They make sure all the proper documentation has been gathered and is ready to move to the processing step. They help prep your mortgage application to ensure the fees are accurate for your loan disclosures. They also may be the one to let the appraisal desk know when to order an appraisal (when applicable), and keep communication flowing with other parties involved in the real estate transaction. 

Perhaps you have seen Loan Officer Assistants reaching out to you in a marketing capacity, too. This is often the case, as an LOA would be qualified to answer questions that may come back in response to what was sent out. Many LOAs focus on keeping relationships with their team's clients healthy and happy.

Loan Officer Assistants play an essential role on a Loan Officer's team. LOAs help borrowers to understand the complex loan terms that they are agreeing to. They are often the one in the most direct contact with clients, helping to build and maintain a positive relationship. They are there to make sure that the mortgage process runs smoothly and help clients achieve their dreams of homeownership. The next time you speak with a Loan Officer Assistant, give them a virtual high-five. They're working hard to make sure your experience is top-notch.


Understanding Mortgages

The RMS Mortgage Process

RMS takes pride in educating our clients, so they make wise decisions when selecting financing for their home. Our goal is to position our clients for long term financial success. From the very first call, we are dedicated to providing you with step-by-step guidance throughout the home financing process. Learn about our RMS mortgage process and experience the RMS difference.

Loan Officer:

The Loan Officer’s primary job is to provide clients with expert advice, so they can make an informed decision regarding their mortgage loan. Our Loan Officers update clients at each milestone throughout the home financing process. This keeps borrowers informed of the loan’s status and makes sure they are aware of any next steps. Our Loan Officers at RMS work solely on a referral basis, so it is vital to them that every transaction result in a happy client.

Loan Officer Assistant:

Loan Officer Assistants make sure all the proper documentation has been gathered and is ready to move to processing. They prep the files to make sure the fees are accurate for the loan disclosures. They also let the appraisal desk know when to order appraisals (usually when the file is ready to go to processing).

Processor:

The Processor assists with submitting the loan to the underwriter, but their primary role is to help collect the financial documentation after the loan is conditionally approved. Additionally, they manage the timeline to ensure a timely closing and keep you in the loop. They also work closely with the title attorney and the RMS closing department to create the settlement statement and other closing documents.

Underwriter:

The Underwriter evaluates your application and documents, double checks the loan guidelines and, if all is in order, issues an Approval. In order to meet the loan program rules underwriters may often ask for clarifications and sometimes even more documentation.

Appraisal:

An independent third-party appraiser is called upon to help estimate the value of the subject property (if an appraisal is required). This appraised value helps to assure both you and RMS that the property is worth the price it’s being offered at.

An Appraiser determines value by:

  1. Comparing recent home sales within the surrounding neighborhood.
  2. Looking at the replacement cost of property.
  3. Identifying obvious defects with the property.

Clear to Close:

Once the client’s loan is “clear to close” that means the mortgage has been fully approved and final documents are ready to be prepared.

Closers coordinate with the settlement agents and attorneys to make sure the documentation is wrapped up, accurate, and that all the terms of the loan are met.

Welcome Home:

After the final walk-through and all documents have been signed, it is time to move in.

RMS is dedicated to finding the mortgage package that is just right for you. Our focus is on you and finding the right mortgage solution for your unique needs. We are ready to guide you home.


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