Mortgage Financing: Back To The Basics
In July 2011, the Consumer Financial Protection Bureau (CFPB) was created to centralize federal consumer financial protection authority. While there have been many changes since July 2011, the largest and most significant changes recently took place on October 3. The historic change, known as TRID (TILA-RESPA Integrated Disclosure), implemented new forms (the new Loan Estimate replaces the old Good Faith Estimate and Initial Truth In Lending Statement…and the new Closing Disclosure replaces the old HUD 1 Settlement Statement and the final Truth In Lending Statement). Additionally, new laws require that the Closing Disclosure be provided to the borrower(s) at least three business days prior to closing. This is actually a GREAT change for you, the consumer, as it will allow for time to review cash required at closing and monthly payment.
Historically, the normal time from contract to close has been 30 days. Many industry insiders believe this may be extended out to 45 or even 60 days. Our company goal is to maintain a 30-day contract to close. There will undoubtedly be delays while transitioning to TRID, but we are committed to maintaining 30-day closings in the long run.
At Premier Residential Mortgage, we have been preparing for TRID since October 2014 when we migrated to a new software system, which we believe to be best equipped for TRID. Additionally, we created our team approach (Team Coble) with a few very basic principles: 1) Close on time, 2) Be under budget with respect to closing costs, cash at closing, and monthly payment, 3) Communicate status weekly, and at various milestones, and finally 4) Provide WOW service to you, our customer. We believe that if we do 1-4 above, we will have provided a memorable, stress free transaction in a lending environment where this is not the norm.
Obtaining mortgage financing in 2015 looks very much like it did in 1988…the borrower(s) must demonstrate the ability to repay the debt by providing documents to prove income and assets. The traditional way of proving income is with pay check stubs, W2 forms, and Income Tax Returns (in the event one is self-employed or commissioned). Assets are documented with either bank statements or by directly verifying bank balances with the institution. Job stability, past credit history and financial responsibility are all important in overall risk evaluation. The days of stated income and stated asset mortgages, subprime mortgages (for the credit challenged) and No Doc Mortgages are mostly gone.
There are numerous mortgage products available in the marketplace today that provide the dream of homeownership. USDA / Rural Housing provides 100% financing for qualified buyers, The Veterans Administration provides 100% financing for Veterans with VA Eligibility, FHA provides financing with as little as 3.5% down for those who qualify, and Conventional loans (Fannie Mae / Freddie Mac) are available with as little as 3% down to those who qualify. Additionally, the State of Texas offers numerous programs to help with down payments for those who qualify.
In closing, don’t be discouraged by the lending process. Qualifying may be as easy as providing the most recent W2 form, paycheck stub, and bank statement.
Article written by Mike Coble, Premier Residential Mortgage of Texas (PRMTX). Mike can be reached at [email protected], or on his cell at (512) 657-6600.
Disclaimer: Premier Residential Mortgage is sponsored by NTFN, Inc., NMLS #75333. NTFN, Inc. is an equal housing lender.