Your Questions About Mortgage Loan Process

Mandy asks…

How does the loan process work for a home that is half-way through a remodel and down to studs?

My husband and I are looking for our first home and have fallen in love with a house that is down to the studs in some areas in the middle of a remodel. The home has no structural issues – it is all cosmetic – but does need all new applicances (has none), new walls (70s style paneling in living room), new flooring (has concrete now) etc. Would we need to get a construction loan even though it is structurally okay? How would the mortgage process work for this?

John answers:

We completed a major remodel of our home a few years ago and we needed to refinance our mortgage several times during the remodel process (so we would have enough money to finish the remodel). In each case the appraiser from the lender appraised the home in its current condition. In your case that would be the value of the home with some walls stripped to the studs. Our loan broker (accurately in our case) advised against getting a construction loan because of the high interest rates and difficulties with loan conditions etc. Instead we handled it with Second Mortagages that were provided as credit lines. This worked real well with paying contractors during the course of the remodel.

Fortunately for us, we learned that the value of a home in mid-remodel is not that much lower than when completed. As a result we were able to complete our remodel. However, we had lived in the home for many years before the remodel and had quite a bit of equity built up.

Hope this helps

Donna asks…

How to do a Mortgage Loan Setup? What are the steps involve?

I understand the Mortgage Processing part but am confused about the steps involved in Loan Setup. Does it start at the initial stage of documentation with the broker? I need to know the steps involved in this process in detail. Thanks…

John answers:

I ‘m not sure just what you are looking at but here we go
1st a broker/lender will take an application (1003) which includes asking detailed information about your job investments and creditors along with information on your current or future home

Next the broker/lender should evaluate your situation i.e what is best for this customer (loan type) once a broker/lender has found a loan that will work for the customer they will or should go over the loan type with the customer and provide them with a Good Faith Estimate of the cost and a Truth In Lending form that will show the cost of money over time ..next or upon approval from the customer the broker/lender should be in the process of getting the loan package a PRE-approval and advise the customer just what is needed to prove income assets etc

Hope this helps ..Need additional help email me mortgagesaver01@yahoo.com

Nancy asks…

I’m in the process of getting mortgage loan and my broker want me to sign IRS Form 8821 is this normal?

IRS Form 8821 (Tax information authorization).

John answers:

Yes…having the 8821 signed during the application process is completely normal. The form is rarely actually used, but its good for them to have in your file in the event they need to verify your income/tax info with the IRS. The form is usually used after your file has closed as a part of quality control. Hope this helps…

Robert asks…

How long is the loan process when buying a house?

I found a house, got a loan approved, made an offer, got the inspection done and the loan company had the apprisal done. Now however my mortgage loan officer said my info was with the underwriters and would let me know of the final approval. Could my loan still be denied?

John answers:

Usually it is around a month maybe a little less depending on how busy the market is.
Essentially the only thing that could keep you from getting the loan is having the house appraise for less than the selling price. Otherwise you already got approved for the loan in the amount you made the offer for, so that should be an issue. Unless you ran up some debt that through your debt to income ratio out of whack. You should be O.K. Usually it takes a few weeks to get the loan written up and things finalized. Plus when did you specify to close, if you chose to close at the begining of February then that is probably why they aren’t done yet.
I just locked in my refinance, (which will take less time) I think we’ll get that closed in 3 weeks. 15yr @ 4.625% Good credit is always a help.

Joseph asks…

how do you word skills gained working for a mortgage broker in sales and loan processing for a job in banking?

I am trying to break into the banking industry. I have a business degree and am currently working for a mortgage broker. I have experience as a mortgage broker and am assisting the BDM with on the job training of new consultants to complete applications, capacity tests and ensuring all requirements are met before sending to the bank. I am also working in administration to process loans to the bank and monitoring of existing clients homeloans.

John answers:

Just apply for a load of jobs, you have a good background for a move into this sector

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