What Your Mortgage Lender Wish You Knew.

1. An Interview with Mortgage Lender Ted Haas, US Bank
Ted Haas has been a leader in the banking industry for 17 years.
He’s processed numerous loans over the years, including my
own! I sat down with Ted to discuss what process he uses to get
Buyers to closing and to learn what he wishes every Buyer
knew. Whether you are interested in a home in Missouri or
in another state, you will want to hear what Ted Haas with US
Bank has to say about buying a home.

2. Katherine: What’s the difference between a prequalify letter
and a preapproval letter?
Ted: With a prequalify letter, there is no credit check or score
obtained. This letter is based on what a Buyer tells me such as
their self-reported credit score and their income. A prequalifying
letter isn’t the same thing as a preapproval letter. A
prequalifying letter is basically a letter stating that the Buyer has
disclosed information and, according to this information, he
qualifies for a mortgage. A prequalify is only as good as the
information submitted by the Buyer. If a Buyer forgets to
mention that they’ve had a bankruptcy or a debt in collections, it
will affect the type of loan for which they qualify. You can get
a prequalified letter here but understand that there is a
significant difference between prequalifying and a preapproval.

3. Katherine: What documents should a Buyer bring when
they visit with you to obtain their preapproval?
Ted: They should bring their most current pay stub with their
year-to-date (YTD) information on it, the last 2 years of their W-
2’s and two of their most recent bank statements. It’s important
that these statements include all the pages. Don’t just bring in
the page that shows the balance in your checking and savings.
Make a copy of the entire months statement. If you already bank
with us here at US Bank then I can get those for you. If there are
any deposits made in your bank statements they need to be
verified. We want to know if these are payroll deposits, gifts or
cash advances.

4. Katherine: Please explain why a cash advance may be an issue
for a Buyer.
Ted: Sometimes a Buyer will try to make their finances look
better than they actually are by taking out a cash advance on a
credit card and depositing that into their checking or savings
account. It’s not a good idea because you’ve taken out debt and
have increased your debt-to-income ratio.

5. Katherine: Are cash gifts ever an issue?
Ted: With conventional and Federal Housing Administration
(FHA) loans, the borrower and the gifter will need to sign a Gift
Letter. The gifter must be a blood relative. On FHA loans,
a gifter must prove that they did not borrow the funds
themselves. We have to be able to track their gift through their
most recent bank statements as the source of large deposits must
be verified. This can be an issue if the gifter doesn’t want to
provide this necessary verification.

6. Katherine: Once a Buyer has their letter of preapproval on hand
they can begin their home search. Does the preapproval ever
expire?
Ted: A Buyer who has been preapproved has 90 days to execute
a contract. If they don’t find a house in that timeframe it’s okay,
but we do have to check their credit to be certain that nothing
has changed and that there are no delinquent bills or large
deposits that have been made. We have a fraud guard that works
behind the scenes. If there are any inquiries on the Buyer’s
credit, we get an alert and have to look into it. It’s best not to
open any new line of credit or make major purchases during this
time. Wait to buy that new furniture or appliances until after
closing.

7. Katherine: I’ve been hearing a few clients discuss cleaning up
their credit report because of medical bills that have gone to
collections. It seems that some people think that lenders don’t
look at medical collections or bankruptcies in the same light as
other collections. Is this true?
Ted: Medical bankruptcy is filed under one of the three
main types of bankruptcies: Chapter 7, 11, and 13. Even a
$20.00 copay could end up in collections – and it all shows up
on your credit report the same way. There are two types of
collections: a collection with a balance and a collection without
a balance. A collection without a balance means you’ve paid the
collection, but your credit score still takes a hit because the
account went to collections. If a collection is on your credit
report and is under $1000.00, it doesn’t have to be paid off. If
the total of all collections is over a thousand dollars then it must
be paid off. As such, a bankruptcy or medical collection does
affect your credit score. However, if there was an extenuating
circumstance, something that was out of the person’s control,
then we can often work together to secure a mortgage.
Ted: Same goes for tax liens or judgements. If you have a
judgement or tax lien against you, they have to be satisfied.

8. Katherine: What questions do you ask potential mortgage
applicants and what would you like for them to know before
visiting you?
Ted: Every mortgage loan applicant needs to complete an
application. I ask if they know their credit score and I want them
to be honest about it. Do they have established credit? If not, we
can build alternate credit, we need copies of utilities and rental
history, all which should be in the applicant’s name.

9. Ted: If you don’t know your credit score, you can
visit AnnualCreditReport.com or credit.com for a free credit
summary of your score. Credit Karma also provides a free
summary but they use a blended scoring formulation which
often shows a higher credit score than the formulation I use
at US Bank. The second option gives you the opportunity to
review your score. The great thing about these sites is that they
are considered soft inquiries and won’t affect your credit score.
Once you have a report from one of these, print out the summary
and bring it when you meet with me. Be warned: going lender to
lender and having them all run your credit could jeopardize your
score.

10. Ted: If you are serious and ready to move forward and have
completed the application, then we do run a credit score check,
review your deb-to-income ratio and your down payment.
Katherine: What are some final things you’d like to add?

11. Ted: Don’t shop by rates alone. Posted rates at any bank may
not be the rate you qualify for. The posted rates are assuming
you have a really good credit score. Be aware of the teaser rates.
Many online lending institutions add 1-2 points to buy down the
rate but you end up paying for the additional points. It’s not
always worth it to buy down points. US Bank keeps
the servicing rights on all our loans.

12. If you are planning on making your dream of homeownership
come true contact me, Katherine Stanislawski, to start the home
buying process.
I provide real estate services in Rolla, Missouri and surrounding
areas.
For Further Helpful Tips on Selling and Buying a Home
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 5 Things To Consider When Buying a Home Together
 Hobby Farm Dreams. 9 Things to Consider Before Buying