Applying for a Provo Mortgage With Variable or Uneven Income

applying mortgage variable income

Income is a major factor for any mortgage loan you’re hoping to secure, and this process can be a bit more challenging for those who have variable or uneven forms of income. From gig economy workers to freelancers and others in similar positions, proving your income to a lender may require some different approaches than you’d be considering if you had a traditional salaried job.

At Altius Mortgage and our partners at Mortgage Ogden, we’re proud to offer a wide range of home loan options to clients in Provo and numerous other parts of Utah, including those perfect for first-time homebuyers — even those who don’t earn income in traditional ways. If you have a variable or uneven income but are still looking to obtain a mortgage, here are some basic tips we recommend following.

Heavy Documentation

If a lender is going to accept your unusual form of income as robust, they will need significant documentation to back it up. They want to see steady months of earnings, and must be confident you can continue to pay your bills regardless of what kind of financial situation you may experience at any given time. As such, think about ways to prove consistency:

  • Provide three years worth of bank statements showing a pattern of regular withdrawals
  • If it applies to your situation, provide advanced notice of termination so your lender can account for any gap in income
  • If you work a seasonal job or have another cyclical form of employment, try to provide six months worth of earnings from the time period when you’re working at full capacity

For seasonal or periodic workers, you should also prepare a detailed explanation of when your income is highest — how much you bring in, when during the year it occurs, and so on.

Improve Credit Score

One element that’s identical for variable income borrowers compared to traditional ones: A good credit score plays a crucial role in securing a mortgage. If you notice blemishes or potential setbacks on your credit report, working to remove them is essential.

If paying down debt seems like an impossibility for you right now, make sure you never miss any payments and communicate with your creditor(s) if there’s the possibility of late fees owed because of an income cycle. Ask your lender for advice on how to improve your credit score so you can get pre-approved before applying for a mortgage, or work with an experienced financial coach to tackle this issue head-on

Down Payment

Another element that’s similar to traditional borrowers: You’ll need to come up with a down payment that meets or exceeds the lender guidelines for your loan type. If you’re not sure what that number is, get in touch with us today and we can help you build an affordable repayment plan over time. But in many cases, planning for down payment savings will begin six months or even a year before you apply for the mortgage.

For more on how to go about obtaining a mortgage despite variable or uneven income, or to learn about any of our mortgage rates or home loan programs in Provo or other parts of Utah, speak to the team at Altius Mortgage today.

Actions to Take Following Mortgage Refinancing

actions following mortgage refinancing

There are several different reasons why you might be considering refinancing your mortgage, but most or all of them are generally meant to help improve your overall financial picture moving forward. With this theme in mind, it’s often not the actual process of refinancing that’s most important here, but actually the actions you take after the refinancing is complete.

At Altius Mortgage and our partners with Mortgage Ogden, we’re happy to offer Utah’s best refinancing options for any client in need, including first-time homebuyers considering this process for the very first time. So you’ve completed a mortgage refinance on your home — what should you be doing next? Here are a number of the options available to you, including those that may even impact the specific form of refinancing you consider to begin with.

Increase Retirement Balance

There are a few different forms of mortgage refinancing, and nearly all of them will involve some sort of adjustment that saves you money. Perhaps the single most common form of refinancing involves lowering your monthly payment by extending the length of your loan. In this case, you’ll be saving tons of money in the long run — but remember that each and every day you’re not paying off your home is another day closer to retirement age.

If you see a chance to speed up the process of paying off your house and finally making it into that dream retirement, then taking that chance may be the best of all possible options for you. You can take those extra funds you have available from lower monthly payments and put them into a high-yield IRA or 401(k) account, which will generate a significant amount of additional money over time.

Increase Monthly Savings Contributions

The financial benefits of a mortgage refinance can go in two separate directions — you can either lower your monthly payments or increase the total value of your home. If you have extra funds available from a lower payment, consider using this money to put more cash in a savings account every single month.

Cash savings can be applied in numerous ways, and if you take this route you’ll never need to worry about how your future expenses. Even a small amount of money saved every month can add up to a tremendous amount — and when it comes time for that vacation or emergency appliance replacement, you’ll be glad that such an option was available.

Emergency Funding

Speaking of an emergency fund, this is one potential use of mortgage refinancing that deserves its own section. Keeping emergency funds available is a vital key to a healthy personal finance plan, and if you have the opportunity to lower your monthly costs it may be wise to set up an additional savings account.

In this case, you’ll want to target an account that’s easily available for emergencies — perhaps it’s a simple checking or basic credit card account for which you can quickly access funds during tough times. Just remember to keep this amount limited, as it should be reserved specifically for emergencies.

Pay Down Separate Debt

Most commonly in the form of credit debt, but also possible in a few other types, separate debt is an unfortunate reality for many people. If you’re able to lower your monthly payments and direct that cash toward paying off debt, consider taking the opportunity.

Not only will this help improve your credit score in the long run, but you’ll also find yourself without any additional bills each month — and when it comes time to organize a mortgage refinance within a few years of paying off your debt, you’ll have plenty of options.

Maximize Investments

If your employer offers an investment account or retirement savings plan, it’s likely that you’ve paid little attention to this option before. But with the money now available to you following refinancing assistance from Altius Mortgage and our partners, you may find it wise to take advantage.

You’ll want to look into investment accounts like IRAs, which can generate additional money on top of your income. If your employer offers this benefit at a reduced cost (such as through matching contributions), then this is definitely the best option for ensuring that each and every day following refinancing assistance brings you closer to your goals.

The Cash-Out Refinance

We wanted to reserve a special final section here for the cash-out refinance, which is a format slightly different than that of other options previously listed. A cash-out refinance involves you leveraging the equity you’ve built up in your home, then receiving a lump-sum of cash as you refinance.

This option is primarily used as a type of financial tool to help improve your credit score, but it can also be an accelerated way of achieving some of the goals we went over above. Do you have significant credit card debt, for instance, that can’t be resolved simply through a small decrease to your monthly payments? By using cash-out refinancing, you could turn your equity in your home into an immediate debt repayment tool.

Your credit score may be improved slightly by a cash-out refinance simply because of additional available funds — whether it’s through lower monthly payments or a lump sum of money that has been paid directly to you. But in terms of overall improvement, this doesn’t rank particularly high on our list simply due to the lack of versatility within this option.

The refinancing process will likely take a few weeks (and perhaps longer, depending on your situation and how the lending market is performing). But in the end, you’ll be able to achieve some or all of your debt repayment or other major financial needs.

For more on the actions you may want to take after refinancing your mortgage, or to learn about any of our home loans or services for first-time homebuyers, speak to the team at Altius Mortgage today.

Meaning of the “Pending” Designation for Homes

meaning pending designation homes

For buyers hitting the home market and seeing what’s available to them, the various listings provided for homes are important to be aware of. There are a few listing designations that may be given, and one that sometimes creates just a little confusion for certain buyers is the “Pending” designation.

At Altius Mortgage and our partners with Mortgage Ogden, we’re proud to offer a number of resources to clients who are in the market, including basic tips on how home listings work. We work with a number of first-time homebuyers who might not be fully informed on the various listing types out there, but we’re happy to lay out all the basics so you know what to expect. What does the “Pending” designation refer to on a home for sale, and how should you be considering any home you see that has this title applied? Here’s a basic primer.

Pending Status Basics

In general terms, a home that’s Pending is one that’s very close to a finalized sale, but isn’t quite ready for closing. Generally speaking, there are three qualifications that must be met for a home to be Pending:

  • The buyer has submitted an offer to buy the home
  • The seller has accepted the offer, either initially or after some rounds of negotiation between buyer and seller
  • The final paperwork is being put together to move the home into Sold status, but has not yet been completed yet

Now, there are also a few rare situations where a home may be listed as Pending even if it doesn’t meet these criteria, but these are extremely infrequent. However, this does mean that if you see a home that’s Pending, you shouldn’t completely shut the door on your chances of purchasing it — though the likelihood is definitely much lower.

Can Others Bid?

Technically speaking, it remains legal for other buyers to submit a bid or offer on a home that’s Pending. However, because the seller will have already entered into an agreement with another buyer and will have taken several major steps, the process isn’t as open to other competitors as it would be if there was a home for sale. In most cases, it simply won’t be worth it for a seller to exit their current agreement and start over with another deal.

Tracking Pending Listings

Now, as we went over above, all is not lost just because a property is Pending. Especially if you notice that a property you’re interested in has been listed Pending for a long period of time, there’s no need to panic. The home might be simply on another list that the real estate agent hasn’t updated yet, or it might be that there are still some steps that need to be taken before it can be finalized — or in other cases, the original deal may be in the process of falling through, and there may be an opportunity for you or other buyers to make your offer after all.

For more on what a Pending listing means on the real estate market, or to learn about any of our mortgage rates or home loan services, speak to the pros at Altius Mortgage today.

Importance of Ratified Contracts for Ogden Homebuyers

importance ratified contracts homebuyers

There are several pieces of documentation that may play an important role in a mortgage and homebuying situation, and one of these is known as a ratified contract. Referring to an agreement between the buyer and seller for the home in question, this contract will go over a few basic details surrounding the sale, plus various conditions that must be met for the sale to move forward.

At Altius Mortgage and our partners with Mortgage Ogden, we’re proud to offer a wide variety of home loans, mortgage refinancing options and more, and we’ll assist you with each and every piece of documentation that’s involved in your home purchase process. What is a ratified contract, why do you need one when purchasing a home, and what are the important elements involved? Here’s a basic primer.

Ratified Contract Basics

As we alluded to above, a ratified contract is a written, legally-binding agreement between a homebuyer and the seller of the home, typically covering not only the purchase price, but also closing costs that are required plus any special conditions that may be present.

These conditions can include any of the following:

  • Any inspections that are required for the sale to be finalized, such as a home appraisal or pest inspection
  • Whether repairs need to be made in advance of the sale completing
  • The date that possession of the home will take place
  • What fees are involved in closing on the transaction itself
  • An expiration date for the contract

Once these and any other relevant conditions have been ironed out and agreed to by both parties, the ratified contract will become a key piece of documentation in the homebuying process. It will outline all of the agreed-upon points between buyer and seller, and can be used as a reference down the line if any disputes or problems should arise. It will typically come along with a commitment or pre-approval letter from your lender, one that states the lender’s intent to finance the purchase of the home at the agreed-upon terms.

The term “ratified” is important here, ensuring that both parties meet their end of the arrangement. There are three important steps that must be met for a contract to be considered ratified:

  • Buyer’s offer accepted: All the details of the sale have been agreed to by both the buyer and seller, and the offer has been accepted by the home’s current owner.
  • Seller counter-offer: If any changes or additional details that were not included in the original offer are included, the seller will provide a counter-offer.
  • Sale contract signed: When both parties sign the document, it becomes an official ratified contract.

Why is a Ratified Contract Needed?

There are several reasons why a ratified contract is important within a homebuying situation, and the first is the legally binding nature of the agreement. Both parties have agreed to everything in writing, so all of their respective responsibilities are outlined ahead of time. There’s no need for arguing over who said what or who should be responsible for paying for what; both sides simply go through with their own parts as set out by the contract itself.

Another important reason why a ratified contract is required is the need to prepare for closing. Note that you can’t get a loan on a home until the contract has been signed, which enables your lender to start working on underwriting your mortgage. You’ll also want to go over all of the details of what’s covered in the agreement, ensuring there are no surprises down the road related to your purchase.

Finally, having a ratified contract in place can help to speed up the process of actually buying the home. All of the pertinent information has been agreed to by both parties, so there’s no need for any back-and-forth negotiation – closing can take place as soon as all of the necessary paperwork is ready.

Furthermore, certain loan programs actually require a ratified contract to move forward at all. This is the case for an FHA loan, for instance, where your lender will use the contract to verify that the home you’re intending to purchase meets all of the program’s eligibility requirements.

Parties Involved

In nearly all cases, your ratified contract will be provided to you by your real estate agent — they may also provide you with a purchase agreement at this time, depending on whether you’re purchasing an existing home or a new structure. However, there are also multiple other parties that will be involved here, including:

  • Seller: As we noted above, this is the party that owns the home in question and has agreed to sell it to the buyer.
  • Title company: The title company needs a copy of the ratified contract to carry out any endorsements or other legal aspects related to the home’s closing. They also need proof of homeowners insurance for the buyer, proof of property ownership by the seller, and other documents relating to this purchase agreement.
  • Mortgage lender: Your lender also needs to sign off on various parts of the document, allowing them to provide your pre-approval letter as well as underwriting your mortgage.
  • Home inspector: The home inspector will be checking out the property to identify any and all potential issues ahead of time, so that they can be addressed before closing.
  • Escrow company: To ensure they have all the documentation they need, you can hire an escrow company to handle the details of your purchase.

Getting Documents Together

Ahead of closing time, it pays to sit down and ensure you have all your important loan documentation together. This includes things like proof of income, bank statements, and tax returns. Having a ratified contract in hand will help make this process easier, as you’ll know exactly what needs to be submitted and when.

If all goes according to plan, closing should take place without any hitches. However, if there are any issues that come up along the way, your ratified contract will be an invaluable resource in getting everything sorted out. With all the pertinent information in one place, it’ll be much easier to identify and address any potential problems.

For more on the ratified contract, or to learn about any of our mortgage rates or home loan services in Ogden or any other part of Utah, speak to the pros at Altius Mortgage today.

Understanding Private Mortgage Insurance (PMI) Requirements

private mortgage insurance requirements

There are several financial considerations that must be made during a mortgage and homebuying situation, and one of these for many buyers is whether they’ll be required to pay private mortgage insurance. Abbreviated PMI, private mortgage insurance is a way of protecting lenders in some situations — what are these, and what are the types of PMI that may be involved in a mortgage?

At Altius Mortgage and our partners with Mortgage Ogden, we’re happy to explain any of the details of our loans to our clients, including first-time homebuyers who may not yet have a full understanding of how this area works. Let’s go over what PMI is, its various types, why you might need it, and how you can eventually get rid of it even if it’s required for you.

Private Mortgage Insurance Basics

Private mortgage insurance is essentially insurance on your ability to pay your mortgage. It’s most commonly required for borrowers who are paying less than the traditional 20% down payment toward their home — this is to protect your lender, in case you’re unable to make your scheduled payments.

PMI payments are made by homeowners themselves to the lender — but usually only for a portion of the loan term. They are typically folded in as part of your broader monthly payment, though there are other possible approaches here that we’ll go over below. In most cases, it’s possible to eventually have PMI removed; more on this in just a bit.

Types of PMI

There are actually five separate types of PMI out there:

  • Buyer-paid PMI: By far the most common type, this is a form of PMI where you pay a monthly fee to offset the risk of default. As we noted above, many of these situations involve this payment being wrapped into your monthly mortgage payments. Borrowers who provide 20% down payment for their home, however, may be able to pay this fee up front; alternatively, they may be given the option of dropping it or offering other financial concessions to avoid this payment.
  • Single-premium PMI: This is what we were just referring to above: With SPMI, you pay a single lump premium that counts as a closing cost. You then do not have to pay monthly PMI or any other similar fee.
  • Split-premium PMI: This format mixes the two above — you’ll make a lump sum payment at closing, but then will also have to pay a monthly PMI bill. In the end, it’s a lot like SPMI. However, the monthly amounts may change if you refinance, making this a good option for many people with a high debt-to-income ratio.
  • Federal Home PMI: Used for situations where borrowers are utilizing the FHA loan program, this template only requires PMI if you can’t make it to 10% of the down payment or higher. It is lifted after 11 years at minimum, or possibly sooner if you refinance. Payment format here is usually a split-premium, though there are exceptions.
  • Lender-paid: Finally, a much rarer form of PMI, the lender-paid option involves the lender covering PMI, but offering significantly higher mortgage rates in exchange.

At least 80% of all homebuyers use standard buyer-paid PMI formats, one where they fold their payment into their regular monthly bill.

How PMI Works

Think of it this way: When you purchase a home, your lender is actually paying the vast majority of the bill, but it’s your rent or other housing payment that goes towards paying this off. Should you default on the loan, the lender may lose a substantial portion of what was paid out to them and can’t be recovered. It is their loss and not yours.

This is what PMI is in place to guard against. Should you default, the lender gets an insurance payout for this loss. It’s not very much money, but should help to offset their loss.

Is PMI An Absolute Requirement?

In many cases, the simple answer here is yes. There are a few situations, however, where you may be able to get by without paying regular PMI.

  • FHA Loans: In many cases when utilizing the Federal Home Loan Mortgage Corporation’s FHA loan program, this will allow you to avoid monthly PMI payments if you can manage a 3.5% down payment on your home. You may need a minimum of 3.5% down from your own funds, however — this is not possible with FHA loans in all circumstances.
  • With 20% Down: In the alternative, if you’re able to make a minimum 20% down payment on your home purchase, then your lender will not be taking enough risk to require PMI of you. There are virtually no cases where buyers putting down the standard 20% amount will be required to pay PMI.

Getting Rid of PMI

Luckily, in most mortgage situations, you will not be stuck paying PMI forever. Specifically, due to the Homeowner’s Protection Act, a lender is legally required to cancel PMI as soon as you’ve managed to bring your loan-to-value ratio down to 80% — that is, once you’ve reached 20% equity in your home. In many cases, you can even apply for an earlier termination of PMI if you make substantial, timely payments; this can be done on FHA loans or with conventional mortgages.

So as long as you make your payments diligently for a few years, you’ll soon be in a position where you’ll have the ability to remove part of your monthly payment that was going toward PMI.

For more on private mortgage insurance and when it’s required, or to learn about any of our mortgage rates or other home loan services, speak to the pros at Altius Mortgage today.

Basics on Home Inspections Vs. Home Appraisals

home inspections vs appraisals

If you’ve made an offer on a home that’s been accepted by the seller, two important parts of the process you’ll be going through in the next short period of time are the home appraisal and the home inspection. Because these are similar processes, they may sometimes become confused for one another — but they are not the same, and knowing the difference is very important as a buyer.

At Altius Mortgage and our partners at Mortgage Ogden, we offer not only a wide range of quality loan options to help you find the home of your dreams, but also assistance with the process you’ll go through to get there. Here’s a quick primer on both home inspections and appraisals, ensuring you understand the differences between them and the purpose of each.

Home Inspection

A home inspection is a part of the process that’s initiated by the buyer, who will (often through their realtor or loan officer) hire a third party home inspector to examine the property and create an official report on its condition. The inspection typically includes a number of components, including inspections of both the interior and exterior of the home, wiring, plumbing systems, air conditioning/heating units, appliances, structures built into or onto the house (decks or patios), foundation and visible insulation or ventilation systems.

The inspector then creates a report based on their findings, and any issues they find (such as faulty wiring, leaky plumbing or malfunctioning appliances) may increase the amount of money required to purchase the home. However, any suggested repairs or issues they note are not binding, and must be negotiated between buyer and seller.

Appraisal

A home appraisal, on the other hand, is initially conducted by a third-party company on behalf of the mortgage lender, and is done as part of the loan approval process. The appraisal’s purpose is to determine exactly how much money can safely be lent to you as a homebuyer as determined by the current assessed value of your potential new home.

This valuation is based on similar properties in the area, taking into consideration factors such as size, condition, location and neighborhood. The appraisal is not a determination of how much money the home will actually sell for, or what you can afford to pay — these are decisions made by your lender during loan approval.

Why Both Are Necessary

While they both involve a general evaluation of the home, inspections and appraisals are done for completely different reasons. The appraisal is to guarantee the maximum amount of money that you can safely borrow, given an analysis of comparable properties.

The inspection is done for your benefit as a homebuyer — it’s worth investing in one because it will provide you with knowledge about the property’s condition, allowing you to make smart decisions about your purchase before signing on the dotted line.

For more on home inspections and home appraisals, or to learn about any of our home loans or mortgage rates, speak to the pros at Altius Mortgage today.

Understanding Transfer Taxes During a Home Sale

transfer taxes home sale

If you’re a homeowner planning to move into a new home, and therefore selling your old one, it’s important to note that your sale isn’t necessarily over once paperwork has been signed. Specifically, one additional area you may have to cover is the realm of transfer taxes, which are included in closing paperwork and have to be handled before the sale can become final.

At Altius Mortgage and our partners with Mortgage Ogden, our quality loan officers are here to walk you through the entire process — we’ll assist you not only with securing a loan and purchasing your new home, but also with important details on closing out prior home sales. Whether you’re the buyer or the seller in a given home sale situation, what are transfer taxes, what do they cover, and which exemptions might a given seller be eligible for in this area? Here’s a basic primer.

Transfer Tax Basics

Transfer taxes in a home sale situation refer to taxes that are collected by the local city or county when the property is bought or sold. This tax becomes active when the exchange becomes public record.

These taxes will also be called documentary transfer taxes or excise taxes, and they’re collected from the purchaser by the local government. The amount is paid at closing, and it can be paid out of both parties’ funds — for example, if your buyer had part of their savings go towards meeting this requirement, you as the seller benefit by not having to pay extra on top of your own closing costs.

Transfer taxes also apply to estate and gift taxes, as well. This means that if you’re purchasing a loved one’s estate after they’ve passed away, or even in many cases where you’re inheriting such a property, these taxes will apply.

Who Pays Transfer Taxes?

In the vast majority of cases, sellers pay transfer taxes. There  are some common exceptions where this rule doesn’t apply — for example, if you’re purchasing a home with the help of your parents (or other family members), and they’re making up at least half of the sales price, then transfer taxes can be paid out of their funds.

The rules here vary from state to state; your best bet is to double-check your state’s laws and regulations on the matter, which you can typically do via a quick online search. In practice, while each local government has its own set of rules, the majority of states follow this general principle: If a husband and wife are buying or selling something together (or through an LLC with a name matching both of their last names), they’re usually able to avoid transfer taxes by one partner covering the cost from their own resources.

How Transfer Taxes Are Calculated

Generally, there are two formats for how transfer taxes may be calculated during a sale:

  • Percentage of the sale: This is a common arrangement, and it means that the total transfer tax rate imposed on a given property will be calculated according to a set percentage of the sale price. This percentage will vary from one region to another — in some areas, it may be as low as 1%, while in others, such as New York City’s five boroughs, it can be as high as 4%.
  • In increments: In other cases, you will have to pay a set amount of transfer tax per every thousand dollars the sale price of your property exceeds a certain minimum threshold.

In some states, transfer taxes will be even higher if your property is being sold for a large number, usually $1 million or more.

Transfer Tax Exemptions

Now, there may be some cases where sellers are exempt from transfer taxes. These include:

  • Gifts: Legitimate, good-faith gifts where the buyers purchase the property with no defects and pay full value.
  • Full value lien: If the amount owed on a lien is more than the value of the property, it will be exempt from transfer taxes.
  • Agent to the principal: If a buyer or grantee uses their own funds rather than a mortgage loan to purchase a property, it will be exempt from transfer taxes.
  • Inherited property: If a buyer inherits a property from a deceased relative, they won’t have to pay these fees.
  • Certain commercial leases: Certain commercial property leases — those over a year but under 35 years in length — will be exempt from transfer taxes.
  • Debt collateral: In some cases, sellers will transfer a property as a debt collateral, which may allow them to avoid transfer taxes.
  • Government agency: In cases like foreclosure or others where government agencies receive the title of the home, transfer taxes are waived.

Are Transfer Taxes Tax Deductible?

Because they are used to legally transfer a real estate title, the answer here is no — transfer taxes are not tax deductible. There is but a single exception here: If the property is purely a work expense, it will generally allow transfer taxes to be deducted at the end of the year. For the record, this does apply to rental and investment properties, so those in these situations must take care to properly deduct from their taxes each year.

In some cases, sellers will add transfer taxes to the cost basis of their property, which is used to calculate your profit or loss upon sale. This is usually done when you are selling or transferring your property to another person or business, especially if the total value of the sale, minus any fees and other deductions, are taxed as capital gains.

For more on transfer taxes when selling or buying a home, or to learn about any of our mortgage rates or other services in the real estate market, speak to the pros at Altius Mortgage today.

Pre-Qualification vs. Pre-Approval for SLC Homebuyers

pre-qualification pre-approval homebuyers

During the very earliest stages of your entry into the mortgage and homebuying world, two terms you may hear often are pre-approval and pre-qualification. And while these are similar processes that serve some of the same roles, they also differ in important ways that you should be aware of before you hit the market.

At Altius Mortgage and our partners at Mortgage Ogden, our Salt Lake City loan officers are proud to work with clients on a variety of these kinds of processes, helping them understand their purchasing power so they can enter the market with better information. Here’s a primer on what both these services are, plus which is likely ideal for you.

Pre-Qualification

Of these two processes, pre-qualification is the less binding and more flexible version. Pre-qualification involves you providing some very basic information regarding your income, assets, debts and previous credit history to your loan officer. The officer then uses this data to offer you a ballpark figure of how much they believe you can afford in terms of monthly mortgage payments.

The key difference is that pre-qualification involves no actual review of the financial documents itself; it merely invites an educated guess about what you could afford. It also allows the potential buyer to have a much broader sense of their purchasing power, as different loan officers can offer differing opinions based on a number of factors. It may involve estimates of things like credit scores, but no hard inquiries will be pulled on your credit or any part of your financial profile.

Pre-Approval

Pre-approval, on the other hand, is a more official form of pre-qualification. It’s actually closer to an actual mortgage application, involving you providing much more detailed information to your loan officer and allowing them to run a formal check of your financial history. This includes pulling up any prior credit accounts you may have, such as credit cards or auto loans, which is important in the pre-approval process because it gives an accurate look at how much debt you’re carrying.

The potential buyer will also need to provide their income documentation, which will then be run through a series of complicated algorithms that can determine exactly how much you can afford. The main benefit to pre-approval is that it gives the client what is known as “soft credit pull” (which doesn’t affect your score), plus an honest look at all the factors involved in the mortgage process so you can truly feel informed about your purchasing power.

Which is Best for You?

The answer here really depends on where you’re at in the homebuying process. Pre-qualification is ideal for clients who are just looking and still exploring their options, while pre-approval can be a good idea for those that have found a house they like and need some official documentation on how much they can afford — though there are also many situations where pre-approval will be carried out before you even begin touring the market, and will allow you to make offers on homes armed with a letter of purchase approval.

For more on pre-qualification versus pre-approval for borrowers, or to learn about any of our mortgage rates or other home loan services in SLC, speak to the staff at Altius Mortgage today.

Mortgage Closing Disclosure: Purpose and Method

mortgage closing disclosure method

In part one of this two-part blog series, we went over some of the basics on mortgage closing disclosures. These are important documents that are sent to borrowers just ahead of their closing day, allowing them to confirm and double-check all the important financial details of the impending mortgage before they sign final documents and move forward.

At Altius Mortgage and our partners with Mortgage Ogden, we’re happy to explain closing disclosures or any other part of the mortgage process to our first-time homebuyers, or to any of our other home loan clients who may be unfamiliar. In today’s part two of our series, we’ll go over why the closing disclosure matters, what you should do with it, and what happens next once it’s been handled.

Purpose of Closing Disclosure

The purpose of a mortgage closing disclosure is to allow borrowers to know exactly what their new mortgage payments will be. Prior to the closing disclosure, they may have been under-estimating those payments by as much as 25% or more! The best time for borrowers to figure out what those final costs are going to be is now, before they sign on the dotted line and finalize their loan.

This will help you avoid issues arising during the actual closing itself. Having all this information up front — and verified as such via the closing disclosure — will allow you to calculate your loan payment as accurately as possible before you sign your final documents and move forward with homeownership.

How to Go Through a Closing Disclosure

As soon as you receive your closing disclosure, you should check it carefully for accuracy. Make sure that all the figures are correct and that you know exactly how much your monthly payments will be after factoring in any other upfront expenses such as private mortgage insurance (PMI), certain closing costs, and even estimated escrow amounts.

Once you’ve gone through it thoroughly, if there are certain figures that you’re not thrilled about or that you feel are inaccurate, don’t sign the closing disclosure just yet. Take a moment to consult with your loan officer, who can help tell you what’s correct and what isn’t.

What Happens After Closing Disclosure

Once everything is confirmed as accurate via the closing disclosure, it will be time to finalize your mortgage and sign the last remaining documents. You’ll be glad you took this time to review the closing disclosure in depth, as it will make for a smooth and straightforward closing process. All you have to do is bring a copy of the disclosure with you to closing day itself, just in case there’s any confusion.

For more on mortgage closing disclosures, or to learn about any of our home loan services or fantastic mortgage rates, speak to the team at Altius Mortgage today.

Mortgage Closing Disclosures: Basics for Park City Homebuyers

mortgage closing disclosures basics

First-time homebuyers entering the market often have a number of questions, especially around the steps and documents involved in the process of obtaining a loan and securing their new home. There are several important facets to the process, and one that’s especially notable near the end of a home purchase situation is known as the closing disclosure.

At Altius Mortgage and our partners with Mortgage Ogden, we’re happy to provide a wide range of mortgage loans and related services throughout Park City and other parts of Utah, including for first-time homebuyers looking for assistance as they enter the market. We’ll assist you with a wide range of documents or related needs that may come up during your homebuying process, including the closing disclosure when it comes time. What is this document, why does it matter, and when will it become part of the picture? This two-part blog will go over everything you need to know.

Closing Disclosure Basics

For those who have not heard of them, a closing disclosure is an important document that comes at the end of a home purchase process, also known as a closing. There are often several different forms that come into play during various parts of the loan process, and one additional form your loan servicer will provide near the end is what’s known as a closing disclosure, which is meant to detail all costs associated with your mortgage.

The closing disclosure will generally be five pages in length, covering a number of different topics and different parts of your loan, including your interest rate, your down payment amount and the terms of your loan. It will also include all costs that you’ll be responsible for or fees that you’ll pay at closing, which can include a wide range of expenses from origination fees to property taxes to various other costs.

When Closing Disclosures Come

The law states that lenders are required to provide borrowers with a closing disclosure at least three days before closing. If you’re receiving a loan to purchase a home, this document is known as the HUD-1, and it’s important for all parties involved to know what it contains and how it will impact their lives after closing on such an important residential transaction.

It’s also important that borrowers go through their closing disclosure in detail, checking it for errors or other possible concerns. If any such mistakes are found, notify your lender immediately to fix the problem and remedy the situation before the closing date itself arrives.

For more on closing disclosures within a mortgage and homebuying situation, or to learn about any of our home loan services or fantastic mortgage rates in Park City, speak to the staff at Altius Mortgage today.