Charlotte NC Home Buyers--Mortgages Then and Now
Charlotte NC Home Buyers—Mortgages Then and Now
If you are like the average Charlotte NC home buyer, you have probably moved to a different home every five to seven years. You probably got a mortgage when you made that move. Getting the mortgage then was most likely fairly easy. A cake walk.
That was then. This is now. Getting a mortgage today is not what you remember.
I’m writing this post because my recent buyer clients, who have purchased homes before, are finding the mortgage process to be different than what they expected and very stressful. I hope that I can explain today’s process and provide some answers that will remove some of the anxiety and stress from getting a mortgage.
If you are a Charlotte NC home buyer today, here are three things to consider about the mortgage process.
How long will it take to get loan approval?
Then
No so long ago, there was very little documentation required to get a mortgage. There were even loans called no-doc mortgages where nothing was verified on your loan application. the basic steps in the process were the same for all loans but there were no mandatory timetables for processing a loan. You could get your loan approved very quickly.
Now
No documentation and no mandatory disclosures and timetables led to fraud and consumer abuse. The inevitable crackdown led to new regulations. Now, you can get preapproved by a lender but until there is a purchase contract, the lender can’t generate the necessary disclosures for you to review and sign. Once those disclosures are generated, there is a mandatory three day waiting period before the lender can proceed. Monies to pay for the appraisal can’t be collected by the lender until you have received the disclosures. If there are any changes to the loan such as a new rate lock or a different loan amount, the disclosures have to be generated again. From the time the initial disclosures are issued, there is a waiting period of seven business days before you can close.
Why does the lender ask me for so much documentation?
Then
No documentation led to fraud and abuse as stated above.
Now
Expect the lender to require documentation of everything about your financial life. No documentation loans have turned into fully and well documented loans. Often, one document that you provide leads to more questions and requests for additional documents. It can seem like a never-ending process. Remember “stated income” income loans where you filled out the loan application stating what your income was without any proof? They don’t exist anymore. In fact, a new Lender Quality Initiative means that the lender has to pull tax transcripts as part of the process to ensure that your tax returns match what your loan application says.
How will my credit score affect my loan?
Then
There was a loan program for just about any credit score. Sure, you might pay a higher interest rate or an obscenely high rate in the case of really low scores, but you could get a mortgage.
Now
Your credit scores will have to be near or above 700 for most mortgage programs. This means that if you are contemplating a move, determining what your credit score is should be your first step. If it is too low, work on credit repair. Even if you have good credit and you are in the loan process, don’t do anything during the loan process that will affect your credit score. The lender is now required to pull a second credit report just before closing. You could find your approval rescinded if you’ve taken on new debt and you no longer qualify for the loan. Always delay all purchases of furniture and appliances until after your loan closes.
Want to know more about buying a home in Charlotte NC and its small towns? Visit www.CarolinaSmallTownLiving.com.
Copyright 2010. Carol Fox. Allen Tate Realtors. *Charlotte NC Home Buyers—Mortgages Then and Now*