NOLA Lending
   Your Loan, Your Way

Call Us Now         
985 612 2784

Posts Tagged ‘lending’

You don’t have to go very far to find the news that mortgage interest rates are at historic lows.  And with rates this low, common sense might tell you it’s time to lock in that low fixed rate loan, right?

Not so fast!

Remember that when fixed rates are low, that means adjustable rates are even LOWER!  So that attractive 4% fixed rate might look good, but a 2.5% adjustable rate might look even better.

So now that we’ve established that low rates also apply to adjustable rate loans, let’s take a closer look at the factors that might help you determine if an adjustable rate loan is right for you.

What is an adjustable rate mortgage?

A variable-rate mortgage, adjustable-rate mortgage (ARM) or trackers mortgage is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets.

Basically what this means is that the borrower benefits from reduced margins to the underlying cost of borrowing compared to fixed or capped rate mortgages, allowing adjustable-rate mortgages to be a great way to save you money today.
Benefits of an adjustable-rate mortgage include:

• Statistics show that adjustable-rate mortgages owe back less over time than traditional fixed-rate mortgages.
• Mortgage maturities can be applied for up to 25 years instead of the 10 year maximum for traditional fixed-rate mortgages.
• Adjustable-rate mortgages allow the borrower to pre-pay principal (or capital) early without penalty.

Adjustable – as the name implies, are flexible to your financial needs. In this ever changing financial climate, secure yourself with a mortgage that can flex and change to keep up with your ever changing life.

3 signs an adjustable mortgage rate might be right for you

• You need the lowest possible payments for your mortgage over the short term.  If money is tight, or you would like to put a plan in place to save the maximum amount on your mortgage payments than an ARM might be the right choice.
• You may be transferring or selling your home in the near future.  ARMs offer the lowest mortgage payment options over the short term, so if there is a good chance you will be selling or moving before the fixed term ends an ARM makes sense.
• You need flexibility of terms.  A fixed rate mortgage is just that – fixed.  But there are several choices with ARM loans including 1, 3, 5 and 10 year fixed rates that can suit a variety of needs.

Choosing between an ARM and Fixed Rate

It can be a daunting experience when considering a new mortgage. Whether you are looking to refinance or to start a new mortgage, where do you start looking? With a multitude of mortgages, technical jargon, and everyone trying to commit you to monthly repayments, it’s hard to know where to turn for help.

The best advice I can give you when shopping for a mortgage is this:

• Research the different options available to you.
• Always ask questions if you are unsure of what is currently available.
• Develop a relationship with a mortgage lender.  If you simply shop around all the time you may simply get a quote.  But a good mortgage lender can be like a financial advisor and give you advice you NEED to hear instead of what you WANT to hear.
• Don’t be scared to say, “No, this isn’t right for me.”

NOLA Lending will never steer you into a mortgage we are certain won’t meet your exact needs. One of our examples of a mortgage which might be of interest to you is the adjustable-rate mortgage.  The lower initial payments seem great, but for some borrowers it may not make the most sense.  Our job is to provide you with sound advice based on our experience to help you make this decision.

If an adjustable-rate mortgage is not the right solution for you, fear not. We have a mortgage solution for everyone.  Just ask NOLA Lending how we can help you today and one of our friendly advisors will go through each option with no obligation.

How do I apply for an adjustable rate mortgage?

If you do decide an adjustable rate mortgage is right for you – NOLA Lending is proud to offer a wide range of adjustable-rate mortgage services to meet your specific requirements. Whether you are a first time or current homeowner, NOLA Lending is confident they can find the right refinancing, or adjustable-rate mortgage to suit your needs.

Why not contact one of our fully trained members of staff today to find out how you could save money by switching to an adjustable-rate mortgage today?

It’s one of the most stressful things mortgage originators, realtors and buyers ever face – last minute emergencies with closings.  Without careful and considerate management, it is easy for a client to find themselves in a strung-out paperwork battle and a fight against time.  But fortunately, the mortgage lending process doesn’t have to be this way for you.

Let’s take a look at the different steps in the lending process and how you can avoid being left with little to no time left on the clock!

The Lending Process explained

In theory, the lending process shouldn’t be a difficult process to tackle; it essentially breaks down into six basic steps:

1. Application
2. Pre-approval
3. Contract
4. Conditional Approval
5. Final Approval
6. Closing

Theoretically, once the mortgage application  is complete, it can be pre-approved with validating documentation and a contract can be drawn up so that the client can progress. This should take a reasonable length of time and come with as few complications as possible.

However, not every lender makes life as simple as NOLA Lending!  But even NOLA Lending sometimes gets stuck with last minute issues during verification (usually things the buyer didn’t disclose) or if someone such as a 3rd party drops the ball.

Common problems in the lending process

Unfortunately, some lending agents from other companies often choose to incorporate drawbacks into the lending process. NOLA Lending always advocates against these tactics and aims to secure your loan as quickly and accurately as possible.

Other lenders can delay your closing by a few extra weeks for any number of reasons such as:

• Lack of experience
• Poor management
• Incompetence
• Lack of communication

How a 30 day contract can be misused

Let’s take a look at how you could lose time and money by negotiating with an irresponsible lender.

First, understand that if you write a 30 day contract to close but you have the lender wait 10 business days for inspection and responses the close date is already in jeopardy.  A lender cannot get officially started without ordering an appraisal, so if you put that on hold for inspections the lender may not have enough time to close.

Below are steps to understanding a 30 day contract, title, and submitting the file for approval from a lender’s prospective:

1. Receive ALL client docs including the contract.  Delaying sending the lender a document can “pause” the whole process.
2. Order title
3. Order appraisal
4. Order insurance
5. Request additional documentation from clients and/or agents
6. Lender waits…
7. Documents are returned (hopefully quickly)
8. The loan is presented to the underwriter
9. Lender waits…
10. Underwriter issues conditional approval
11. Lender works approval and requests all required items from 3^rd parties
1. Updated income or assets should be obtained
2. Missing signatures on real estate forms should be completed including amendments, etc.
3. Explanation letters may be required
4. Updates or corrections to appraisal or title, or any other issues should be addressed
12. Lender waits… until everything is received from ALL! We cannot submit for final approval without these final docs!
13. Once ALL documents are received from ALL parties, submit for final approval and Clear to Close.
14. Receive final approval and Clear to Close
15. Send closing package
16. Close!

After a successful closing!

This may seem like a simple process, but let’s take a look at what is really going on here.

• The contract is written – so far so good
• The clock starts 30 days counting down – Those 30 calendar days are really only about 22 business days
• Lender waits on inspections (only if Agent or Client requests the lender to do so).  This may mean up to 10 – 12 days of additional delays
• Now there are only 18-20 days left and counting down quickly
• All paperwork must ordered from different parties which can take time while we wait on what we asked for
• The time in between dwindles down to about 5 business days or less of close very quickly

As you can see, not everything is quite as simple as it seems. Unfortunately, these delays are all too common.

How a 30 day contract can be further delayed

Other legitimate examples of how the lending process can be delayed can include:

• Insurance company waits until the last minute to submit insurance as it is needed long before the close date (express a sense of urgency with your insurance agent)
• Clients employer takes a while to provide information (same as above)
• Client takes a while to produce docs (work urgently and diligently to provide info & docs)
• Agents may take a while to produce required certificates or inspections

So if a poor lender wastes valuable time and everything doesn’t come back to the lender within 48 hours from the closing, and it takes 24-48 hours (generally) for an underwriter to review submissions; last minute issues can appear quickly, and worst of all, appear to be all the lenders fault although it really is not.

Study documents at the closing!

How to get the most from the lending experience

NOLA Lending wants you to know there are many responsible lenders out there and we hope you chose one of us to work with, and that there are simple ways you can help combat unnecessary delays in the lending process.

Here are some quick tips NOLA Lending advocates to help you save valuable time and money:

• Research the company you are going to work with
• Talk to an loan agent and see if you agree with their attitude and competency
• Make sure you uphold your part of the contract and submit paperwork immediately
• Feel comfortable being able to discuss the progress with your lender
• Feel comfortable being able to discuss any discrepancies
• Use “Full Disclosure” with your lender

NOLA Lending wishes you the very best in your lending process and hope that you have a fulfilling and profitable experience. If you have any questions regarding something you have seen here, or about lending in general, please feel free to contact one of our friendly agents at NOLA Lending in Covington who will be more than happy to answers any and all questions, with no obligation.

So what are you waiting for? Find out how NOLA Lending in Covington can help you today!

A mortgage calculator is a handy tool, but it cannot replace a mortgage professional. A mortgage calculator can give you a ballpark figure for what you can afford, however, based on your income and, depending upon how sophisticated the calculator is, the local tax rates and the cost of homeowner’s insurance for the properties you’re considering.

Caveats

Homeowner’s insurance rates will vary considerably depending upon where the home you’re looking at is located – especially in southern Louisiana – where the ability to get private coverage or having to go with the state Fair Plan may make or break your mortgage application!

You have to take this into account and using national averages is really not that useful as a means of determining how much you’re going to end up paying for this necessary cost. An insurance company is really the only reliable source for this info, or a mortgage broker that can find out from an insurance company for you.

You’ll also want to make sure that you consider taxes into the equation. These will vary from place to place and not all online mortgage calculators even consider this. If your taxes are around $3,000 per year, you can count on that amount being added to the cost of owning your home. This may put the cost of the home over the edge for you where affordability is concerned.

Make sure you take into account the fact that a mortgage calculator just gives you a number based on a percentage. For instance, a mortgage broker works with you in a way that mirrors how a bank will determine your suitability for a loan. This will include taking into account the amount of expenses you have already. Your car loan, insurance payments, credit card debt and so forth will all factor into how much you can afford in the way of a mortgage.

A mortgage calculator will usually just give you a percentage, somewhere between 28 and 33 percent, of your total income and factor in a few other numbers to determine how much you could borrow.

Calculators Have No Lending Authority

A mortgage calculator is handy and can give you some rough ideas of your borrowing capacity. However, it’s important to remember that banks don’t make lending decisions based on what these calculators say you can afford.

So while a mortgage calculator can get you started, give you an idea of how much you should seek and so forth, it takes a home mortgage professional to really determine how much you can borrow.