As the mortgage business continues on its path of being overly cautious and conservative I though I would share the following with you. Residential mortgage financing is still readily available at very attractive rates, but the new regulations place a premium on working with someone with experience and attention to detail.

 

1)    Verbal employment verification will be done on ALL loans no sooner than 5 days prior to closing. Some companies are actually doing this at closing.

 

2)    Your bank statements, credit report, and pay stubs are only good for 90 days.  Anything that will be older than 90 days at closing will need to be updated.

 

3)    The appraisal has become the main focus of the loan and will be reviewed very closely.  It is no longer rubber stamped once we have the report.  The age of the comparable sales are of particular importance in that as a general rule all 3 comps should be within the last 180 days.

 

4)    Borrowers need to sign a form acknowledging receipt of the appraisal no later than 3 days prior to closing

 

5)    All income will be directly verified with the IRS. Each applicant is to sign IRS form 4506T authorizing the lender to verify that the income provided is the same that is on file with the IRS.  Historically, this was done on maybe 3 out of 100 files now it is on EVERY loan.

 

6)    An Annual Percentage Rate ( APR) test needs to be done no later than 3 days prior to closing and if the APR has changed by more than .125% from the initial disclosure at application, you will be required to sign an updated Truth In Lending disclosure.  The biggest factor here is the title company fees are not available at the loan application when purchasing a home.

 

7)    You must wait a minimum of 7 days after applying for a loan to close.

 

    The 680 is now 720.  In order to obtain a lenders best rate you need to have a credit score of 720 or higher.  Anything less than 720 will demand a higher interest rate.

 

9)    You could be penalized to pay your own real estate taxes.  Some states have passed legislation requiring escrow accounts on all loans. A fee of .25% of your loan amount is becoming more and more prevalent with this request..

 

10)   Fixed versus ARMS.  The spread between a 30 year fixed and a 5 year arm has been averaging about 1% (5% versus 4%) making the arms much more attractive to some people.

 

Written by Tony Pigatti of Archer Bank TPigatti@ArcherBank.com

 

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