Utah Mortgage Loans – Knowing the mortgage rules takes the stress out of buying a home

Generally speaking, experienced Real Estate Agents have a firm grasp on the basics of the Home Loan Approval Process. However, the lending world has changed so much recently that even some Mortgage Originators themselves have found it challenging to keep up with all the new regulations and rules that keep coming out of Washington as well as from each lender.

New laws, disclosure requirements, new guidelines for appraisers, risk based pricing, credit score, secondary approval layering,  property type, HOA and Condo insurance requirements, Title and property flipping rules are just a few of the rules that can cause problems for a borrower applying for a Utah home loan.

With that in mind, Real Estate Agents can help their clients avoid many problems by being aware of a few important details during this phase of the transaction.

It is very important for home buyers to get a full loan approval, sometimes called Underwriting Approval before spending any time looking at new homes with an agent. Put simply, this gives you a line by line break down of any issues that need to be clarified or corrected in order to get approved for a home loan.

To help you with this process, we have listed some of the top issues your Agent should keep their eye on while helping you with the process of finding a home:

7 crucial loan issues Agents must look for:

Property Type -

Different property types can have specific lending guidelines that influence down payment, credit score and mortgage insurance requirements;  Property types include: Condo, Town House, High-Rise, Dome Home, Single Family Residence and Shoe House. Utah does not typically see a large variety of homes available but its important to know what your lender will require if you are considering any type of property that is outside the typical single family home for the area.

As an example, if the appraisal process takes three weeks but your average time for an approval is two weeks, then its probably not a good idea to write a your offer with a closing date 4 weeks out.

Residence Type -

Investment, Owner Occupied, Second Home. The residence type is different from the property type, and might be called “how it will be lived in”. This can dramatically change the amount a lender will loan or the rate they will charge, or if they will do a loan at all. A seller may ask “Am I required to sell my property before moving into a different one?” or “If I buy a home in the same city as my current home is it considered a second home?”  “If I buy a home for my children is it classified as an investment property?” The answers to these questions make a big difference when you look for a home loan in Utah.

Rates and Locks -

A typical rate lock period is 30 days, and pretty much the only way to change the rate after locking is to switch mortgage lenders.  Interest rate pricing also has certain adjustments for credit score and down payment, and property or residence type, all of which could have a big impact on monthly payments and ultimately approvals.

A rate increase of only 1% could mean the difference between an approval or denial.

Headlines and (Un)Employment -

You and I aren’t the only people that watch the news. Underwriters stay up to date with current events as well and borrowers who’s pay is determined by commission or could be affected by the economy may have to jump through a few extra hoops to prove that their employment and income is secure.

Job changes, periods of unemployment or property location are other things to consider that may cause a speed bump in the home loan approval process.

Title and Property Flips -

Banks consider a “Flip” any property that has been purchased by an investor and is then sold to a new buyer within a 30-90 day period.  Often, an investor will do some cosmetic fix ups like fresh paint, carpet, or landscaping and try to re-sell the property for a good profit margin.

It may be a perfectly reasonable transaction BUT many lenders have strict rules in place that prevent borrowers from getting a loan on properties that were not owned for more than 90 days by the previous person.

This rule is something that is constantly being reviewed. Lenders have changed it several times, and will likely change again. It is important that your agent is aware of any potential issues and is able to help anticipate how to deal with them. A great Title Company is your best friend when it comes to avoiding headaches with title issues.

Homeowner’s Association Insurance -

Certain lenders will require Condos and Town House communities to have insurance and reserves coverage based upon specific ratios on the number of units that are owner occupied vs. rented in the community.

It can cost up to $300 to receive an HOA Certification, and the process can take a few weeks so make sure your Due-Diligence period in the purchase contract allows for ample time to obtain the necessary requirements for the lender.

Appraisal Ordering Procedures -

Many new consumer protection laws dealing with Appraisals have been created to prevent future foreclosure epidemics. Regulators are continually reviewing the effect these new regulations have on the market and the industry.

Sadly, some of the new appraisal regulations have significantly delayed the home buying process, and have even brought down neighborhood prices in some areas.

VA, FHA and Conventional home loan programs all have different appraisal ordering procedures and policies, so its important that your agent is aware of which home loan type you are approved for so that they can anticipate any delays and allow time for them in the purchase contract.

Keeping you and your Agent informed during the home loan approval process can save you time and stress in the home buying process. Working with a direct lender can also speed up your Utah Home Loan approval.

The Professionals at Utah Mortgage Team are Mortgage Experts, and are committed to making sure your loan is done quickly so that you can focus on finding a home without the stress of wondering whether your home loan will get approved. We work with anyone in Utah and cover Salt Lake City, Layton, Ogden and all major cities in Northern Utah.