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Mortgage Information

Should You Refinance During The COVID-19 Situation?

Covid-19 and Refi

Covid-19 and Refi

Rates are lower than ever; when a refinancing is done right, it can save you thousands of dollars. But not every potential refi makes the cut. Sometimes the expenses just don’t justify the potential savings.

It is time to refinance your home mortgage if the terms lower your mortgage interest rate, pay off their mortgage years earlier, or saves thousands in interest over the life of the loan. You can save serious money by refinancing your mortgage. But due to refinancing fees and expenses, not every refi makes financial sense.

COVID-19 is creating changes with lenders and how they are doing business. This is resulting in refinancing taking longer and getting stricter than it has been in the past. Although the mortgage process is considered essential as a financial transaction, depending on where you live, there may be changes related to COVID-19  involving your appraisal, rate lock and closing process.

Rates are quite low and because your home is your biggest financial investment, the equity can be very useful as a resource in times of trouble. But if you’re thinking of financing your home loan there are several steps you should take to make sure that it’s the right move for you.

How Long Do You Plan On Being In Your Home?

Being able to answer this question will help you figure out the term length you want on any refinanced mortgage; but there’s another reason asking this question …

If you plan on moving within the next 5 – 10 years, it could be worth your while to look at an adjustable rate mortgage ( ARM).  You get a lower rate initially with an ARM because the rate can adjust after the teaser period. But if you move before the end of the fixed-rate time frame, you don’t have to worry about whether the rate is going up and down in the end. Additionally, your payment will tend to be lower because most adjustable rate mortgages are based on 30-year terms.

Age Of Current Loan

The age of your current loan sometimes plays a role in whether you can refinance. Even if you can refinance, it does not always make sense.  When you refinance you have to pay closing costs.  If you are not planning on staying in the house past the breakeven point when the savings and the additional expenses paid starts to net to overall reduced costs for home ownership, the it is not the time to refinance.  You may want to accelerate buying a new home to realize the saving from lower interest rates.

Plans For Monthly Savings

If you determine that you’re going to save money by refinancing based on the rate and term you can get, make sure that you have a plan for what you’re going to do with the monthly savings in order to put yourself in a better financial position. No one knows exactly when COVID-19 is going to end and how long it will take for the economy to recover. If you can save money now, you can work on establishing the savings need should the vaccine be delayed or we continue with a longer recession

You could use your savings to build up an emergency fund. Maybe you choose to allow yourself to save money in the future by paying off high-interest debt now. You can also use this to catch up on saving for retirement if you stopped contributing temporarily while dealing with the situation caused by the virus.

It’s a very volatile market right now, so we advise all of our clients to rely on the advice of their Home Loan Expert and Financial Advisors at all times.

The Mortgage Refi Process

Approving a mortgage is a complicated process, one that requires a lender to validate a borrower’s income, check the value of the home being used as collateral and scrutinize the title history of the property.

Just as refinancing applications picked up, the coronavirus pandemic dramatically changed the way everyone in the mortgage industry works. Loan officers no longer go to the office. Appraisers stopped walking through houses. And no one gathers around the title company’s closing table. The process is a little slower because everybody’s working from home right now. Things that would take an hour to do are taking a day sometimes.

It is more difficult to verify a borrower’s employment. A task once dispatched with a quick call to the borrower’s human resources department now means leaving a voicemail and waiting a day or two for a response.

Meanwhile, homeowners looking to refinance may have to get in line behind buyers who need a mortgage so they can close on a house which are a priority with lenders.

The mortgage industry already had been digitizing, and lenders quickly adapted to many changes. One stumbling block, though, is that most lenders still require some documents to be signed in the presence of a legal witness and notarized.  Florida allows for mobile notaries and they are busier than ever.

Sometimes, documents are being signed remotely and online and mobile notaries are not allowed yet.  You need to allow time for in person notarization and overnight mailing of documents.  Digital closings may be the way of the future, but we are not there yet.

What You Can Do to Secure a Smooth Refinance

Here are a few ways you can make the refi process as smooth as possible:

— Get your paperwork in order. Don’t let something simple like a missing document delay your refinance. Collect PDFs of financial documents, including pay stubs, bank statements, tax returns and retirement accounts.

— Make sure the lender will honor your rate lock. In normal times, lenders extend rate locks for 30 to 60 days, meaning you won’t have to pay more if rates go up before your loan closes. These aren’t normal times, though, and many refinances aren’t closing within 30 to 60 days, so make sure your lender is willing to extend your rate lock if your deal is delayed.

— Keep your credit score tight. Now isn’t the time to miss a payment, take on new debt or otherwise do anything to lower your credit score. Lenders are being especially strict about borrowers’ credit histories.

 

Virtual Home Buying Made Easy!

Virtual Homebuying

Virtual Homebuying

Gov. Ron DeSantis enacted stay-at-home orders for Florida effective April 3, but the order considers real estate an “essential service,” so Realtors may continue to operate under limits set by CDC guidelines.
Under the issued Homeland Security guidance, “residential and commercial real services” are included on a 15-page list of essential services. These cover settlement services and government offices that conduct title searches, notaries, and mortgage and recording services, as well as construction. The advisory letter was created by the Homeland Security’s Cybersecurity & Infrastructure Security Agency.
Optima Properties is able to continue to service your needs as a Buyer.
Showings:
  • In-person showings are considered a health risk. We can
Zoom, Facetime, or Skype showings
  • Online Video Tours are available on active listings currently and more are being developed every day.
Contracts:
  • Digital Signing of all Contract Documents
  • Zoom, Facetime or Skype Contract Review
Deposits:
  • Wired Earnest Money Deposits
  • Following Wire Fraud Protection ( Voice to Voice Confirmation)
Property Inspections:
  • Electronic Delivery of Inspection Reports
  • Zoom, Facetime or Skype Inspection Review
Mobile Notary:
  • Mobile Notary and Virtual Closings Now Available
House Key Delivery:
  • Non Contract Key Delivery Service Post Closing
Please contact me for all your Real Estate Related Needs.
Stay Home and Stay Safe!

Key Trends Home Buyers Should Watch in 2019

2019 Real Estate Market Trends
2019 Real Estate Market Trends

2019 Real Estate Market Trends

It’s a time to look ahead, to make new plans, to achieve new dreams. If those dreams include buying your own home, you should keep an eye on the ever-changing tides of the housing market. Now, markets are like the weather: You can’t entirely predict how they will act, but you can get a sense of the forces that will push things in one direction or another.
There will be more homes for sale, especially in luxury markets
There has been a tight inventory of homes for sale for several years now and homes have been hitting the market, but not enough to keep up with the demand. Nationwide, inventory actually hit its lowest level in recorded history last winter, but this year it finally started to recover. Inventory growth is expected to continue into next year, but not at a blockbuster rate—less than 7%. This is welcome news for buyers.
Affording a home will remain difficult
Life is also going to be more difficult for home buyers, because mortgage rates are expected to continue to increase, as well as home prices, so the pinch that buyers are feeling from affordability is going to continue to be a pain point moving into 2019.
Mortgage rates, now hovering around 5%, are projected to reach around 5.8% by the end of 2019. That means the monthly mortgage payment on a typical home listing will be about 8% higher next year. Meanwhile, incomes are only growing about 3% on average. That double whammy is toughest on first-time home buyers, who tend to borrow the most heavily and who don’t have any equity in a current home to draw on.
Millennials will still dominate home buying
Just a few years ago, Millennials were the new kids on the block, just barely old enough to buy their own homes. Now they’re the biggest generational group of home buyers, accounting for 45% of mortgages (compared with 17% for baby boomers and 37% for Gen Xers). Some of them are even moving on up from their starter homes.
At the time of last year’s forecast, the GOP’s proposed revision of the tax code was still being batted around Congress. While there was talk that it might discourage people from buying a home, no one really knew how it might affect the real-estate market.
This year … well, we still don’t really know. That’s because most taxpayers won’t be filing taxes under the new law until April 2019. And while some people might have a savvy tax adviser giving them a better idea of what’s in store, for many, the reality check will come in the form of a bigger tax bill—or a bigger refund.
Renters are likely to have lower tax bills, but might not be tempted to buy while affordability remains a challenge, and with the new, increased standard deduction reducing the appeal of the homeowner’s mortgage-interest deduction.
“I think the new tax plan will affect mostly homeowners and home buyers in the upper parts of the distribution,” says Andrew Hanson, associate professor of economics at Marquette University in Milwaukee, WI. “Those who either own or are buying higher-priced homes are going to pay a lot more.”
The biggest change resulting from the new tax law, Hanson predicts, will be in mortgages, since people will be less inclined to take out large mortgages.

Why Your Mortgage Is Getting More Expensive

World events are conspiring to make it more expensive for you to borrow money to buy a house.
Mortgage rates have increased for six consecutive weeks, according to Bankrate data, bringing interest on a 30-year fixed rate loan to 4.44 percent—the highest level in 11 months—while home prices continue to rise due to a lack of available homes.
After years of tepid economic growth, inflation and wage growth recently found a groove, while the Federal Reserve’s plan to raise short-term interest rates multiple times for a consecutive year has reduced the value of government debt.
Homebuyers Should Get off the Fence
Mortgage rates are moved by the yield on 10-year Treasuries, rather than short-term rate hikes by the Fed. That’s why mortgage rates fell throughout 2017, for instance, even as the central bank raised the federal funds rate three times. Rates remain cheap, however, compared to historical prices. A 30-year fixed-rate mortgage came with an interest rate above 6 percent just before the Great Recession in 2007. Potential homeowners should get off the fence and make a bid, assuming you have an affordable home target and adequate savings, because rates are likely only heading north.
Mortgage rates are expected to climb in 2018, so it might be worth shopping for a mortgage before this long period of low rates takes a turn.
Here are several predictions from the largest housing and mortgage groups for the 30-year fixed-rate mortgage:
  • The Mortgage Bankers Association predicts it will rise to 4.6 percent in 2018.
  • The National Association of Realtors expects it be around 4.5 percent at the end of 2018.
  • Realtor.com says the rate will average 4.6 percent and reach 5 percent by year-end.

Tax Deductions to Take in 2017 Before They Disappear

As you’ve no doubt heard, the U.S. tax code got an overhaul—so what does that mean for the 2017 return you’re filing right about now? It means that this is your last chance to take advantage of tax deductions from the old tax code.
Here is a rundown of four major tax breaks that are disappearing after this filing year, and how to take full advantage of them for 2017.
Home Office Deduction
With the increasing popularity of telecommuting and working from home, the home office tax deduction is one that many people opt to take. If you’re full-time self-employed, this deduction will continue in 2018. But for all you office workers who work in your “home office” on the occasional Friday? The gig is up.
“In 2018, for non-self-employed people, the home office deduction is going away entirely,” says Eric Bronnenkant, CPA, CFP, and Betterment’s head of tax. If you are a W-2 employee this is the last year you will be able to take advantage of the home office deduction. The home office deduction falls under what’s called “miscellaneous deductions,” and includes business expenses that are not reimbursed by your employer. Miscellaneous deductions can’t exceed 2% of your adjusted gross income, but if you meet the requirements, you can take the deduction in 2017.
Unlimited property tax
One of the biggest changes for homeowners in the new tax bill is the cap on deducting property taxes.
In the past all property taxes were tax-deductible. Yet going forward in 2018, the maximum you can deduct is $10,000, and that includes state and local income tax, property tax, and sales tax.
That means if you pay more than $10,000 a year between your state and local income taxes, property tax, and sales tax, anything exceeding that amount is no longer deductible. For your 2017 return, make sure every penny you pay in property taxes is deducted, along with your state and local taxes—or, if you’re in a state without income tax, a portion of the sales tax you paid.
Moving expenses
If you moved in 2017, lucky you: You’re the last to take advantage of the ability to deduct your moving expenses, provided your move meets certain requirements (e.g., your new job is at least 50 miles farther away than your old job was from your old home).”Previously, people could deduct all the expenses associated with [relocation] moving,” says Priya Mishra, the managing attorney at Top Tax Defenders. “This will now be gone.”
The only exception going forward, according Patrick Leddy, a tax partner at Farmand, Farmand, and Farmand LLP, will be members of the armed forces. So if work took you to a new locale last year, don’t forget to dig up your receipts and deduct those moving expenses.
Interest on a home equity loan for non-home improvement purposes
A home equity loan is money you borrow using your home as collateral. This “second mortgage” (because it’s in addition to your original home loan) often takes the form of a home equity loan or home equity line of credit (HELOC). Traditionally, the interest on these loans could be deducted up to $100,000 for married joint filers and $50,000 for individuals. The best part? You could use that money to pay for anything—college tuition, a wedding, you name it.
But starting in 2018, home equity loan interest is deductible only if it’s used for one purpose: to “buy, build, or improve” your home, according to the IRS. So if you’re dying to update your kitchen or add a half-bath, you’ll get a tax break from Uncle Sam. But if you want to tap your home equity to go to grad school, well, that’s on you.
More bad news: Unlike the mortgage interest deduction where loans taken before 2018 could be grandfathered into the old laws, old home equity loans have no such exemption. People with existing HELOC debt take the hit just like homeowners applying for one now.
But there is one small loophole: To reclaim this deduction, you could refinance your second mortgage and your first into a new mortgage that lumps together both debts. This essentially turns your HELOC into a regular mortgage, which means that you can deduct that interest. Just remember that refinancing can be costly, and that this new loan will be subject to the new, smaller limits on deducting mortgage interest. In loans originating on or before Dec. 14, 2017, that limit is $1 million. On loans made after that point, the cap is $750,000.
Will I owe more taxes next year?
Worried about losing all of these deductions? Though the new tax plan is drastically changing how most people will file their taxes, it doesn’t necessarily mean that you will end up owing more. Limits on mortgage interest deductions may be dropping, but so are the tax rates for most income groups. While the amount of property tax you can deduct is shrinking, the standard deduction is growing. So, it may all balance out.
The most important thing to do, after making sure you’ve grabbed all of the tax deductions you can for 2017, is to sit down with your accountant or financial advisor and size up where the new tax laws leave you.That will give you plenty of time to prepare for 2018 taxes and beyond.

How To Buy A Second Home?

You’ve found the perfect new home for your family, but your current house hasn’t sold yet. You can’t afford to carry two mortgages, or maybe you were counting on money from your sale to help with the down payment and closing costs.

Before you let that dream home slip away, consider these strategies to help bridge the transition:

Make an offer that’s contingent on the sale of your house:

A seller may be persuaded to accept your offer with the caveat that you’ll have to sell your house before closing on theirs. You’ll strengthen your chances of getting a seller to take a chance on you if you can show that your home is priced properly and has a solid marketing strategy.   Successful contingency offers depend on good communication between the real estate agents representing both sides.  It’s up to you and your agent to reassure the seller that the closing won’t be delayed.  Obviously, in hotter housing markets with potentially multiple bids, it can be harder to get sellers to accept such an offer.

Offer the seller a rent-back option:

One way to buy yourself extra time to complete your sale is to offer to buy the new house, then rent it back to the seller after closing.  A rent-back agreement is typically for just a month or two. But this arrangement can give sellers extra time to move – or to find a new house of their own – while putting a little money in your pocket and keeping you from having to pay two mortgages at once.

Tap the equity in your current home:

If you have a high credit score and considerable equity in your house, you could free up some of the latter with a home equity line of credit. A HELOC lets you use up to 85 percent of your home’s value, less the balance remaining on your mortgage, and is fine-tuned based on your credit profile and income. Most HELOCs have a variable interest rate, so it’s in your best interest to pay off the loan as soon as your current home sells.

This strategy may let you buy a house before you sell, but it’s not a last-minute option. A HELOC requires an appraisal, income verification and a thorough credit check, so it takes time – generally 30 days or more – to qualify, says Tim Beyers, mortgage analyst with American Financing in Aurora, Colorado. If you’re thinking of going this route, make sure you run the numbers with an expert upfront, Beyers says.

To qualify for the new loan, a lender will evaluate your current mortgage payment, plus the HELOC payment and your new monthly mortgage payment, to calculate your debt-to-income ratio for the new mortgage approval, Beyers says. If your income is high enough to have a debt-to-income ratio below 40 percent with all those payments and other monthly expenses taken into account, only then should you consider a HELOC, he adds.

“Once you start dipping into your home’s equity, that changes the equation when you apply for a new mortgage,” he explains. “Taking too much out can hurt your qualification chances on a new mortgage. Don’t make an offer, then try to scramble to do the math.”

Add a HELOC to your new mortgage:

With this strategy, you break up the financing on your new home with a first mortgage for the amount you need, plus a HELOC to make up the difference in your shortfall for a downpayment, says Elise D. Leve, senior mortgage banker at Citizens Bank in New York.

Once you sell your current home, you can pay the HELOC portion off in full and end up with the single mortgage you wanted in the first place, Leve says.

Get a Bridge Loan:

A much riskier strategy is what’s called a ‘bridge’ or ‘swing’ loan. Using your existing home as collateral, you take out a bridge loan for three months to five years to use as the down payment on your new home. Once you’ve purchased your new home, you sell the old one and pay off the mortgage and the bridge loan. Such a loan is less risky in a fast appreciating market where appreciation can cover the extra payment on the old home. Even in the best market, however, swing loans can be expensive, last-ditch propositions that are fraught with caveats. Bridge loans can cost 5 to 10 percentage points more than a typical equity loan. Your home must be lien free. Excellent credit is mandatory, as are good income-to-debt ratios. It may be a better idea to get a cash-out refinance, second mortgage or equity loan to use as a bridge loan. Traditional financing is cheaper and less risky, but that could preclude you from landing another mortgage for a new home should the lender consider you stretched too thin.

Mortgage Rates and The Fed

The Federal Reserve kept the benchmark rate unchanged on September 21st, in a divided vote that alludes to the possibility of a hike before the end of the year.

“The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives,” the Federal Open Market Committee (FOMC) released in statement. “The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.”

“Our decision does not reflect a lack of confidence in the economy,” Fed Chair Janet Yellen said in a press conference, later adding, “We’re generally pleased with how the U.S. economy is doing.”Today’s action was largely expected by analysts as policymakers stood fast this summer, despite initially forecasting four hikes this year. The federal funds rate informs the trajectory of mortgage rates, which remain at historic lows.

Perhaps no sector has benefited more from ultra-low rates than housing, which was devastated by the real estate crash. Home sales are expected to total about 5.7 million this year, up from 5.4 million in 2014 and 4.6 million in 2011. The recovery can at least partly be traced to 30-year fixed mortgage rates that remain below 4%, down from about 6% in 2008, keeping borrowing costs low for buyers.

But today’s housing market is supported by far more than low mortgage rates — namely steady job and economic growth. What’s more, 30-year mortgages are priced off 10-year Treasury note yields, which do rise as short-term rates climb, but not as steeply.

Doug Duncan, chief economist of Fannie Mae, the giant government-sponsored funder of mortgages, expects this week’s Fed hike of a quarter of a percentage point to have virtually no immediate impact on Treasury or mortgage rates, noting markets already have priced in the move. Assuming the Fed raises its rate by a percentage point over the next year, Duncan expects 30-year mortgage rates to drift from 3.9% to 4.1% during the period. That would boost the monthly cost of a typical $225,000 mortgage by $26 to $1,454 — not enough to deter most buyers.

Adjustable-rate mortgages, many of which are modified annually, could increase about twice as rapidly, by about a half a percentage point. Yet as long as job growth and aggregate U.S. incomes increase proportionally, Duncan expects any market impact to be modest. A far bigger restraint on home sales, he says, is a limited supply that should push up prices by nearly 5% both this year and in 2016. As a result, Duncan expects home sales to increase 4% in 2016, down from 8% this year, with higher rates holding back 1% to 2% of deals.

“As long as the rate rise is gradual, I don’t see it as a hugely important factor,” he says.

Common Fees When Buying A Home

When buying a home, most people focus on how much the home costs and what interest rate they can get on the loan. While understanding the lending process is very important, the other fees that home buyers overlook when it comes to their home purchase.

There are some fees that will require up-front payment. Other fees may be rolled into the loan for your home. It’s important to understand the difference and know what you’ll be expected to pay.

Earnest Money Deposit

To prove you’re “earnest” in your purchase commitment, a buyer can expect to deposit to a trust account 1% to 2% of the total purchase price as an earnest money deposit within days of entering into a contract.This amount can change depending on market factors. If demand in your area is high, a seller could expect a larger deposit. If the market is cold, a seller could be happy with less than 1%.

Other governing factors like state limitations and rules can cap how much earnest money a seller can ask for.

Escrow account

An escrow account is basically a way for your mortgage company to make sure you have enough money to cover related taxes, insurance and possibly mortgage insurance. The amount you need to pay varies by location, lender, and loan type. It could cover costs for a few months to a year.

If you only provide a small down payment, you may be required to purchase private mortgage insurance. Private mortgage insurance, commonly referred to as PMI, is typically provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults.

Sometimes this means you are required to pay a full year’s worth at time of purchase, or it will be rolled into your monthly payment.

Escrow accounts are common for loans with less than a 20% down payment and mandatory for FHA loans, but it’s not required for VA loans.

Origination Fees & Points

The origination fee is the price you pay the loan officer or broker for completing the loan, and it includes underwriting, originating, and processing costs.

The origination fee is a small percentage of the total loan. A typical origination fee is about 1%, but it can vary. You should shop lenders for more than interest rate, but all of the fees associated with the loan.

Inspections

You want to be assured your new home is structurally sound and free of defects before you complete the purchase. Those assurances come with a price.

  • Home inspection: This is critical for homebuyers. A good inspector will be able to notify you of structural problems, defective applianes, leaks, and other potentially serious problems. Expect to pay $300 to $800 for a home inspection, although cost varies by location and the size of the home and how many stories it is.
  • Radon inspection: An EPA-recommended step, this inspection will determine whether your prospective home has elevated levels of the cancer-causing agent radon. A professional radon inspection can cost several hundred dollars.
  • Pest inspections: Roaches are one thing. Termites or wood fungus are a whole different story. Expect to pay up to $150 for a Wood Destroying Organism inspection.

Attorney

Some states, such as North Carolina, require an attorney to be present at closing. In other states, such as Florida, this is optional. If you use a lawyer, expect to cover the costs, which vary by area and lawyer and what the attorney is being asked to do.

Credit check

Just because you can get your credit report for free doesn’t mean your lender can (and they will actually pull all three). You have to reimburse the lender, usually around for these reports that usually run about $30.

Insurance

If you live in a hazard-prone area, you might need to purchase extra insurance in addition to homeowners insurance, these can include wind and flood. Lenders will require that you purchase the required insurance to protect their investment. If you are a cash buyer, you have the option of buying insurance or self-insuring. Make sure you understand the risks.

Appraisal

Your lender will not approve a loan for a home without knowing what its fair market value is. They will determine this value based on an appraisal.  Appraisal costs vary by market area and the size and complexity of the property. An appraisal will typically cost $250 to $1000.

 

Title Insurance

Title insurance covers you in the unlikely case that the person who sold you the house didn’t actually own it or if information on the title was false. Typically this is verified before the purchase of your home, but this insurance protects the lender or the buyer against loss arising from disputes over ownership of a property.

The lender will require you to have title insurance for the value of the loan. You are also required to have title insurance on the value of the property. Whether the buyer or seller pays for this is area specific and is a protocol not a mandate and can be negotiated as a condition of the contract.

Survey

A survey is not required in all instances, but your lender may require a professional surveyor to determine exactly where your property lines are drawn. Your attorney will also review the survey to ensure that there are no encroachments. Prices vary widely, but expect to pay at least $100.

Document preparation fees:

The lender, broker, Title Company or closing attorney will usually have a fee to cover the preparation of the required documents for the loan and closing paperwork. These fees are typically rolled in closing costs for the home and may be covered by either the homebuyer or seller.

 

State Recording Fees:

Depending on where you live, there may be a fee required for recording and holding the information regarding the sale.

Ensure A Smooth Mortgage Application Process

What to do before closing:

  • You can still be denied for a mortgage loan, even after you’ve been pre-approved by the lender. The pre-approval is not a commitment or guarantee. You’ve been conditionally qualified for loan. But you need to stay qualified all the way up to the closing. The less your financial situation changes, the better.
  • If you withdraw or transfer funds for any reason before closing, your lender will probably ask for a written explanation. They will also want to see a record of the transaction, such as your bank statements.
  • Make sure you have a home owners insurance policy in place. Your lender will require this. They might even require you to pay the first year’s premium in advance, by setting up an escrow account. The lender may contact your insurance agent before closing day, to verify the policy and coverage amount.
  • If you make any large deposits into your account, tell your lender about it. It will only help your cause, as far as mortgage approval goes. Provide any documents you have relating to the deposit.

 

What to avoid before closing day:

  • Don’t spend a lot of money. Implement a self-imposed “spending freeze,” as much as possible. You obviously have to buy groceries, gas for your car, and other necessities. But don’t spend anything beyond that. Keep things as stable as possible until after you close on the home.
  • It’s best to avoid any major purchases during this period. Your lender might have certain cash-reserve requirements for the loan. So a major reduction in assets could hurt your chances of getting the final approval.
  • Don’t open any new credit lines, such as credit cards. The same goes for buying a car, applying for a store credit card, etc. These things will change your debt ratio, which could cause problems with your final approval. Mortgage lenders hate surprises.
  • Don’t switch jobs before closing, unless it’s completely unavoidable. A new job usually brings a change in income, as well. If your income goes down, it will alter your debt-to-income ratio in a bad way. A change in employment will also require a lot of paperwork changes. Some lenders will verify your employment again, just before closing day.

 

Typical Closing Cost: Who Pays What?

Closings-Costs-Chart

This chart is a representation of the standard real estate closings.  Different rules may apply by State or county within a State.