Why Your Bank Statements Will Affect Your Mortgage

November 20, 2020 by Cindy Steelman

Bank Statement Loan Tips In Roseville California

A first-time homebuyer in Roseville, or anywhere, knows that there is quite a bit of paperwork involved. You can’t really avoid this, no matter how much you try. Applying for a mortgage can be particularly daunting but at Steelman Mortgages we make it easy.

One of the your important documents a lender will ask for is your bank statements.

Do you know what this tells your mortgage lender in Roseville, aside from what you spend in a month? Quite a lot.

Bank Statements

Bank statements are documents that are issued either monthly or quarterly, which give a summary of banking activity. These are sent through USPS, e-mail, or sometimes both. Banks generally give you statements so that you can keep better track of your funds and, should there be inaccuracies, report them in a timely manner.

If you have both a checking and savings account, activity from both will likely be in the same singular statement. This also summarizes how much money is in your account and shows a rundown of activities throughout a set period.

If you are self-employed, in addition to bank statements, you must have your federal tax returns submitted. If you are working in a company, then you are on a payroll, which means you would have to provide recent pay stubs alongside W-2s and your federal tax returns.

“Underwriting” is a process that lenders use to analyze your documents and they will give you an approval or a denial depending on many factors. One is verifying your bank statements wherein underwriters do research and assess the risk level you pose. Red flags can pop up during this phase, if there are any, such as a low savings account balance, overdrafts, and unstable income. A sudden deposit of a large amount is a major red flag, as it may be a loan that doesn’t reflect on your credit report.

This is important because your down payment is meant to prove that you are a responsible borrower with savings towards a down payment from a steady income. Once that is done, your lender will give you a definitive yes or no.

Sourced and Seasoned

It’s not just about having bank documents to present; it’s what the bank statements themselves contain. Any mortgage lender will always be looking to see if the assets contained in your account are “sourced and seasoned.” By that, it means they know where your funds are coming from (“sourced”) and that these funds have been in your bank account for some time, not just suddenly dropped in there (“seasoned”).

Both factors essentially assist in fraud avoidance. This also gives your lender all the assurance they need to see that you are not using a loan to make a down payment. Therefore, at least two bank statements (all pages) are required.

Steelman Mortgages: Your Roseville Mortgage Broker

Essentially, your bank statement serves as a way for your lender to verify that you have enough funds to make the monthly payments. It also lets them know that you can cover a down payment and any closing costs required.

Looking for a reliable mortgage company in Roseville and throughout California? Steelman Mortgages is here for you. Call us at (916) 847-7263!

Is This Year Making House Acquisition in the US More Affordable?

November 18, 2020 by Cindy Steelman

This year has brought many challenges to everyone. It continues to reshape the way people live their lives and how everyone interacts with others. But as the saying goes, there is a light in every darkness. This light is somehow apparent in the real estate industry. If you are curious about how this time has positively affected the real estate business, here are some things you need to know.

How This Time has Affected the Real Estate Industry

While the pandemic has affected many real estate market activities, it is not all positive. One of the biggest setbacks is that many people are losing their jobs since there is limited movement in the market. However, no matter how big the pandemic’s impact on the market, not all aspects will be affected the same way.

One positive event that future homeowners can celebrate is the fact that there is a current decline in property values. It can be bad news for some, but it also means more affordable homes for people who currently have healthy finances.

With the rise of the unemployment rate and the lack of secured jobs, banks are less likely to lend money to people. While many factors can affect actual house prices, it is safe to assume that these prices will not rise dramatically in the next few months.

Why Buying a Home Now Makes Sense?

If you compare the numbers from recent years, you will observe that the current rates are the lowest they have been for a long time. If you plan to apply for a mortgage soon, you should also know that current rates have been steady for a while. Having a competitive interest rate on a fixed mortgage can help make your housing costs lower than usual.

In fact, the weekly figures from the Mortgage Bankers Association show that the average interest rates for 30-year fixed mortgages with conforming loan balances, jumbo loan balances, and even those backed by the FHA have declined by 53 basis points since March this year. The rates were considered a record low because of coronavirus.

Should You Buy a House Now?

It depends on you. If you plan to buy a house to serve as your home for a while, but you plan to sell it after many years, then a low mortgage rate sounds like a good deal. Waiting for a few more months may not guarantee you the same offer, but you need to know that there are many factors that you should consider before deciding.

For example, the economy is one crucial factor you should consider. If you believe you can continue to pay off your mortgage loan despite the unstable economic conditions, this is an opportunity you should not let go of.

Buying Your First Home with Steelman Mortgages

The answer to whether you should purchase a property now depends on your level of preparation. If you are in a healthy financial condition, the low mortgage rates and property values today are a once-in-a-lifetime opportunity you should not miss.

If you are a first-time home buyer in Roseville and are looking for a mortgage offer to take, we can help make the process smoother for you. At Steelman Mortgage, we personalize our mortgage services depending on our client’s requirements. Call us today at (916) 847-7263, so we can start connecting you with mortgage options suitable for your needs.

Why an FHA Loan Has a Leg Up on Conventional Mortgages

November 11, 2020 by Cindy Steelman

Nothing stunts a home loan application like a low credit rating or inability to make the minimum deposit. Instead of dedicating corporate hours towards a downpayment that you aren’t likely to afford any time soon, why not consider an FHA loan? This mortgage is ideal for prospective homeowners in poor financial health and provides government assistance.

What is an FHA Loan?

As compared to its conventional counterpart, which requires at least a 5% down payment, a credit score of 620 or higher, and debt-to-income (DTI) of 45%, the government-backed FHA loan is more forgiving of first-time homebuyers.

Guaranteed by the Federal Housing Administration, an FHA loan offers lender compensation if you end up defaulting. However, you won’t apply for your loan through the FHA itself—you’ll still have to link up with a regular mortgage lender.

An FHA loan requires only a 3.5% down payment, a credit score of 580 or higher, and a DTI of 50%. In some cases, you can apply with a credit score of as low as 500.

Qualifying for an FHA Loan

Being a “low-income” individual won’t automatically qualify you for an FHA loan. To be eligible, you must satisfy the following criteria:

A 3.5% down payment with a credit score of at least 580—between 500 and 579, you’ll need to put down a down payment of 10%.
You’re purchasing a single or multi-family home for up to four families. You can also buy a condominium or manufactured home.
You must adhere to a borrowing capacity that will depend on the type of property you purchase. Consult the US Department of Housing and Urban Development website for state and county information regarding borrowing limits.
You do not intend to purchase a property with significant structural or safety issues.

The Different Types of FHA Loans

FHA loans come in various shapes and sizes that include the following.

Traditional. This mortgage pertains to a primary residence for a single or multi-family home and is available at a fixed or adjustable rate.

Home Equity Conversion or Reverse Mortgage. This loan is available for older homebuyers who want to tap into equity as cash.

Construction to Permanent. This loan is specifically for homebuilders.

203(K) Rehab. This mortgage allows for home improvements and additional funds.

Energy Efficient Mortgage (EMM). This mortgage allows you to roll the costs of eco-repairs to appliances and fixtures such as furnaces and insulation without adding to your deposit.

The Advantages of an FHA Loan

The primary advantage of an FHA loan is its lenient borrowing demands. As compared to conventional loan stipulations, the credit and debt requirements of FHA loans are incredibly forgiving. There are no income limits and you do not have to be a first time homebuyer.

What You Should Look Out For

FHA has a mortgage insurance premium that can come up to 1.75% of your loan upon closing. This also comes with a monthly payment of 0.45% to 0.85% of your loan cost.

Some home buyers won’t save up enough to make a 3.5% deposit. If you’re part of this statistic, you may need to consider a USDA (very good for rural areas and has income limits) or a VA loan (available only to members of the military community).

FHA will also restrict you from borrowing under a certain amount, and if your chosen property poses severe safety risks.

FHA Loans with Steelman Mortgages in Roseville

Though an FHA loan demonstrates fairly evident benefits, it doesn’t always complement low-income borrowers. Always discuss with a lender what your best options are—whether that be to consider an FHA loan or otherwise. If you’re a first-time homebuyer in Roseville, consult with our experts at Steelman Mortgages to determine how you can best finance your purchase. Call (916) 847-7263 for a free home purchase qualifier and to kick-start your application.