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Industry Announcement

Aug 5
1:08
PM
Category | Mortgage Speak

Recently, the Consumer Financial Protection Bureau issued an “Advance Notice of Proposed Rulemaking (ANPR) seeking information relating to the expiration of the temporary qualified mortgage provision applicable to certain mortgage loans eligible for purchase or guarantee by the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac...” The ANPR notes that the CFPB is planning to allow the temporary qualified mortgage provision, known as the GSE Patch, to expire in January 2021.  

So, what does this mean? CFPB Director Kathleen L. Kraninger explains, “The national mortgage market readjusting away from the Patch can facilitate a more transparent, level playing field that ultimately benefits consumers through stronger consumer protection.” Furthermore, “With the large percentage of loans being sold presently to Fannie and Freddie in excess of 43% debt-to-income ratio [the threshold typically required for loans to obtain qualified mortgage status], the outcome of what will happen to the GSE Patch is very important to our industry” says Norcom Mortgage President, Phil DeFronzo.  

To read more about this, please visit the CFPB’s press release here:  

https://www.consumerfinance.gov/about-us/newsroom/bureau-releases-qualified-mortgage-anpr/


Whether you’re a first-time homebuyer or its been many years since you last went through the mortgage process, there are bound to be questions that come up along the way. You should never feel embarrassed to ask your loan officer any question, no matter how simple you may think it is. However, if you want to start with some mortgage basics, here are the answers to five questions you may feel shy about asking - but shouldn’t! 

1. Am I considered a First-Time Homebuyer? 

This may seem like an obvious question, but the answer may surprise you. In the mortgage industry, you are considered a first-time homebuyer if you have never purchased a home, if you have not owned or co-owned a home in the last three years, or if you’ve fulfilled the necessary waiting period after a foreclosure or short sale. 

2. What is the difference between a home appraisal and an inspection? 

home appraisal provides information on the value of a home, decided by several factors including, but not limited to, the location of the home, proximity to schools and facilities, size of the lot, size and condition of the home itself, and recent sale prices of comparable properties. A certified appraiser formulates this value for the lender, and it is an essential part of the mortgage process.  

An inspection provides information to the buyer about the home’s current condition and will note any existing or potential future issues. An inspector will notify a buyer about any areas that are in need of repair. This can help the buyer to negotiate a better purchase offer or at the very least, be aware of the conditions in the home they wish to purchase. 

3. What is an interest rate? 

Like a credit card or auto loan, a mortgage will have an interest rate. Interest is simply defined as the cost to borrow money from your lender. The interest rate is expressed as a percentage of your total loan balance and is paid on a monthly basis, along with your principal payment, until your loan is paid off. Your interest rate is determined by several factors, including the current economy, your credit score, the loan amount, and more. 

4. What is DTI? 

The debt-to-income (DTI) ratio is a personal finance measure that compares an individual’s monthly debt payment to his or her monthly gross income. Your mortgage loan officer will calculate your DTI, and let you know what amount you are qualified to borrow. 

5. How long will this process take? 

Everyone’s loan scenario is unique and while we cannot give an exact timeline, we are proud that at Norcom, 85% of our loans close in 30 days or less. If you are interested in closing in a timely manner, we suggest you call a Norcom Loan Officer to get pre-approved. With our JumpStart Pre-Approval Program with Rate Assurance, we can lock in your interest rate for 90 days while you search for the right home!


Are you one of the many Americans dreaming of buying your first home, but don’t quite feel ready? People delay homeownership for many reasons; some are unsure where to settle down, some have poor credit and fear they won’t get approved. As a mortgage company, we understand that every person has a different path to homeownership. If you foresee a home purchase in the next few years, now is the best time to start preparing, and we’re here to help! 

Just as with any project, your preparation will set the stage for your success. Think of your first homebuying experience as your largest personal project yet!  

Step one: Identify Your Goal 

*Phew*, that one was easy! You’ve already completed step one, your goal is to purchase a home. 

Step two: Research  

Have you made a choice about where you’d like to live? Researching towns is an important part of the process. You will want to evaluate average home prices for the area, consider potential property taxes, crime rates, and school ratings, and, more personally, determine the proximity to amenities that are important to you. 

Step three: Set a Timeline 

Just like registering for a race inspires a runner to kickstart their training, establishing a homebuying timeline can help a prospective homebuyer kickstart their preparation! Most importantly, be sure to set a realistic and achievable goal. If your aim is to purchase a home within two years, think about what you will need to do over the next 24 months to make that a reality. Are you allowing enough time to improve your credit score? Is there enough time and money each month to save for an ideal down payment?  

Step four: Take Action 

With a prospective closing date in mind, do your best to stay on track toward your goal: 

  • If you haven't yet, you should check your current credit score. It is wise to figure this out as soon as possible. Once you know, you will be able to see where you need to do work to improve it. Whether it is paying down credit cards, or enlisting the help of a credit repair service, your credit score is crucial to the mortgage application process. It is best to start preparing now! 

  • It is wise to start saving what you can, even though there are loan products that offer little or no down payment options. Remember that there will be closing costs, moving expenses, as well as repairs and furnishings to include in your budget. For a goal of collecting $20,000 over the next two years, you would need to save $833 each month. If you can’t find room in your budget to set that aside every month, consider extending your timeline a bit longer. If someone in your life will be gifting you funds to assist in the home purchase, try to discuss what that amount will be, so you can adjust your own savings plan accordingly. (If you plan to use gifted funds, you will need to have a gift letter documenting it; your Norcom Loan Originator will be happy to assist you with preparing one.) 

Step five: Talk to your Loan Originator 

Following these preparatory steps, you will be in a good place when you are ready to start the official home buying process. When the time is right, talk to a trusted Norcom Mortgage Loan Originator about getting pre-approved!


Apple and Amazon would like us to believe that for any question we have, a quick “hey Siri” or “Alexa” will unveil a perfect and concise answer. That may be true if you are asking about the weather or to turn on music, but what if your question is something like “What is the difference between a mortgage pre-approval and pre-qualification?” or “What credit score do I need to have?” and “What is my down payment requirement?" These questions require asking someone with much more experience; you need to talk to a loan officer! 

It turns out, most American consumers feel under-educated about the mortgage process, according to a Fannie Mae survey* released this month. Some common questions surrounding homebuying are about credit scores, down payments, debt-to-income ratio, and homebuyer assistance programs. 

Fannie Mae reports: 

“Although the usage of online sources of mortgage information is becoming more common among consumers, they still:  

  • Overestimate the minimum credit score necessary to qualify for a mortgage;  

  • Overestimate the minimum down payment necessary to qualify for a mortgage; and  

  • Remain unfamiliar with low down payment programs.” 

What does this mean? Fannie Mae says that misperceptions about the mortgage process could be holding potential homeowners back. People who would like to own a home assume it is not a possibility for them, despite being at a qualifying level. 

Norcom Mortgage wants everyone looking into the homebuying process to know that we are available to answer all questions! Please reach out to your loan officer or call 1-855-Norcom1 to speak to an experienced professional about your situation. You may already qualify, or we will share the steps you can take to make your dream of homeownership become a reality! 

 

*See the full survey at Fannie Mae Housing Survey Results - Consumer Understanding Research.


There is a lot to think about when planning a move. Not only do you have to think about the style of the house and the number of bedrooms, but a smart homebuyer must also consider whether the neighborhood meets their needs. Do you want to live in a tight-knit community where everyone knows each other by name and your next-door neighbor would lend you a cup of sugar in a pinch? Or do you desire a more secluded neighborhood where everyone minds their own business?

There is no such thing as a perfect neighborhood and every zip code has pros and cons. You might love a house, but if it’s in a troublesome area, it may have a negative impact on your day-to-day life, as well as the resale value of the home. We’ve outlined several red flags below to be aware of while checking out a potential new neighborhood.

1. Too many houses on the market?

A neighborhood with an abundance of homes for sale indicates there may be something causing homeowners to leave. It could be something about the neighborhood itself, such as social issues like increased crime or falling school ratings, or gentrification of the area raising living costs and reducing affordable housing options. Alternatively, there could be many houses up for sale because of the homes themselves. If a neighborhood was developed all around the same time period and the homes appear very similar, it could be evidence that the houses were constructed by the same builder. Therefore, the homes will age at the same rate and may run into similar repair issues. Multiple homes for sale in this type of development could indicate they were built with poor quality. Think about this when wandering through a potential neighborhood!

2. Are the homes and yards in good condition?

A well-maintained property is a sign that homeowners care about where they live. It doesn’t matter if the homes on the street are 1,500 square feet or 10,000, it is obvious to see when a community cares about their neighborhood and its perception. If you feel that all the other homes on a street are in disrepair and the yards are dead or overgrown, you may want to avoid moving into this area. It’s likely that a neighborhood such as this may lead to falling home values as well, so think about your investment before making a purchase.

3. Less-than-stellar school ratings?

Have you taken a look at ratings of the surrounding schools? Just like the previous red flag, you can tell a lot about a potential neighborhood by looking at the nearby schools. A shrinking school system may suggest an aging population, or it could signify school quality and the community’s attitude toward public services in general. If you have children or are thinking of starting a family, you will want to pay special attention to school ratings online or ask on community social media pages.

4. Where are all the people?

If you attend an open house in the neighborhood where you are thinking of moving, take note of how many people are out and about. Did you see any kids playing in a yard or residents spending time on their front porch? This could demonstrate the culture of the neighborhood, or it could indicate that residents do not feel safe spending time outside in this area.

5. How are the streets and sidewalks?

It is common for residential streets to have some potholes or crumbling sidewalks in areas, especially if your region experiences harsh seasons. However, an excess of infrastructure issues could indicate a town or city is lagging in public services. If house hunting in the spring or summer, you won’t necessarily know how the town will maintain the roads in the middle of winter. If a street light goes out and you call the city works department, will they see to a repair, or neglect this neighborhood? See if you can talk to any potential neighbors to ask these questions.

 

If you are relocating, remember to look beyond just the house, and evaluate a neighborhood as a whole. Check for the red flags on this list, and if the neighborhood passes the test, it could be great for your next home! Call your loan officer today to get pre-approved for the home, and neighborhood, of your dreams!


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