Illinois Mortgage Rates and News

Here in the Chicago area we are starting to see the first signs of Spring. The days are getting longer, the air is warmer (for today, anyways), and people seem to be smiling more. For those of us in the real estate and mortgage fields, one of the major signs of Spring is when first time home buyers start to appear. By that gauge, it must be Spring because my phone is ringing a lot. Are you thinking of buying a home this year? If you are a first time home buyer, you are probably nervously looking at the housing market, wondering if this is a good time to take the plunge. On one hand mortgage rates are low, there are lots of properties to choose from and the sellers are extra motivated. On the other hand you’ve probably heard about how the mortgage market has changed, and how much harder it is to get a loan now. It is true, mortgage qualification is harder than it was before, and some people who might have qualified last year won’t be able to buy now.

This might be a great time for you to buy, or it might not. The first step to finding out is to see how you best qualify for a mortgage. This means you need to be pre-qualified, or pre-approved for a mortgage. Both terms are different levels of the same thing. With both, you are sharing your financial information with a mortgage loan officer, and they are helping you figure out how much of a home you can afford to buy, and what the best program is for your needs. I often start with a mortgage pre-qualification, which is usually just a conversation over the phone. I often start out the conversation by saying we are going to play a game of 20 questions (sometimes it turns out to be more). The idea is that I will ask you everything about your jobs and financial situation, your future plans and goals. My questions are designed to find out all I can about a potential home buyer’s income, credit and assets. By going into depth, I am looking for both opportunities and red flags. If a red flag pops up and I see a problem of some sort, I will ask more questions to make sure I have the full story. Sometimes things that look like major problems can be easily solved with a little foresight. The other part of what I am doing is narrowing down the options, and figuring out what loan programs you can qualify for, and what programs would work best for you, both now and down the road.

Once I have had this pre-qualification conversation, I generally have a pretty good idea of whether you are ready to buy, or not. But to make sure, it makes sense to take the next step, mortgage pre-approval. This is especially important now when mortgage guidelines are changing on a regular basis. A mortgage pre-approval means we are investigating further, and approving you for a mortgage before you find a property. This means I will need to have the right documentation. Depending on your situation and the loan program you are applying for, we may need more or less, but typically we’ll need to see at least the following:

• W2s for the last 2 years (full tax returns if you are self employed).
• Your pay stubs for the last 30 days.
• Full bank statements for the last 2 months, along with statements from any retirement or stock accounts.

Once I have your documentation, I will run your credit, and put all the information into our automated underwriting system. With most loan programs, the underwriting system has become the key factor in loan approval. The underwriting software is set up based on Fannie Mae and Freddie Mac guidelines (FHA, too) and takes into account all the factors that a human underwriter would consider. Years ago, it could take a week or more to get a pre-approval. Now I can usually do it with a single phone call, and have a preliminary answer for you within an hour.

There are times when we need to go a step further and have the underwriter sign off on the loan, but in most cases this approval is all that you need. One thing to keep in mind is that the approval is only as good as the person asking the questions. Garbage in, garbage out. So make sure that you work with someone who knows enough to ask the right questions and understands your full situation as well as the mortgage guidelines.

Illinois Mortgage Rates and News