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LGBT real estate buyers and homeowners who have been thinking about taking out a home loan or doing a mortgage refinance may now have more reasons to do so – and to start working on the project sooner instead of later. That’s because interest rates are currently hovering at record lows, representing some of the best bargains in decades. But after being historically cheap for the first half of the year interest rates are expected to soon start their inevitable ascent. Many experts predict that the window of opportunity to get the best rates may even close before the end of summer.
LGBT borrowers can expedite the process for a smoother transaction that results in a great rate if they follow these preemptive guidelines:
– Shop Around for the Best Broker
In today’s market any lender can offer attractive rates, but mortgage brokers who are resourceful problem solvers provide additional value. Borrowers may encounter obstacles related to closing costs, property valuations, and available cash for the down payment. Or they may experience hassles with refinancing when there is a second mortgage or home equity loan involved. LGBT borrowers often face additional challenges, for instance, because they want to buy in partnership but are not legally married – or if their legal marriage from one state is not recognized in the jurisdiction where they want to buy or refinance. But a creative mortgage broker experienced in making loans to members of the LGBT community can figure out how to pair the borrower up with appropriate lenders, strategize the application process, and find the best overall loan package.
– Get Organized
Processing mortgage paperwork can take time and there are often unexpected delays along the way. So those who want to capture extremely affordable rates before they evaporate are urged to set their plans into motion now, rather than waiting until rates start to rise. Find out exactly what documents are required by talking to the mortgage broker or lender. Most borrowers will need tax returns for the past two years, at least a month’s worth of pay stubs and bank account statements, and any legal documents pertaining to outstanding loans. Statements from stock portfolios, retirement accounts, student loans, and other paperwork related to significant assets or financial obligations should also be obtained. After gathering everything together, make copies and keep them in a central file in a secure, convenient location.
– Put the Brakes on New Purchases
Immediately start working on debt reduction and savings, paying off credit card balances and reining in household expenses. It is important to note that just because the mortgage application has been approved that does not mean that the borrower is free to on a spending spree. Most underwriters currently monitor debt all the way up until the moment the loan is funded, so to ensure that nothing backfires don’t incur any new debt from loans or purchases. The timeframe for that moratorium on fresh debt should extend at least 90 to 120 days prior to loan application and be observed until the month after the loan has closed.
Once rates show clear evidence of upside momentum everyone who has been considering a home purchase mortgage or refinance will stop procrastinating and start applying for their loans. That kind of surge in business happens whenever a significant transition toward more expensive rates occurs, but it almost always leaves lenders and borrowers unprepared. Banks that have been trimming back the personnel levels in their underwriting departments in order to save money are usually caught off guard – and it can take them a few months to get up to speed. During the interim period new loan applications pile up and borrowers experience the frustration of watching rates go higher before they have an opportunity to lock theirs into place.
But as interest rates creep up, so do the corresponding monthly mortgage payments. That triggers new calculations in terms of the formulas used to approve or reject mortgage loans, because there is a delicate balance that must be maintained in terms of the borrower’s ratio of income to debt. After being badly burned by the recent mortgage crisis lenders have become quite stringent about those parameters, and unless a borrower can verify enough income to comfortably handle the mortgage payment the loan will have to be reworked. If the size of the monthly payment hits a certain metric or benchmark, for example, the homeowner may have to either accept a higher interest rate, pay extra points, or agree to borrow less money.
The key to success is, therefore, to quickly capture the cheapest possible interest rate so that the domino effect of higher costs and more restrictive lending policies doesn’t happen. Follow the recommended tips outlined above, crunch the numbers with the help of a qualified lender or mortgage broker, and enjoy snagging a great mortgage and interest rate that will offer sustained value for decades to come.
To find real estate and mortgage professionals dedicated to active support of the LGBT community, visit www.GayMortgageLoans.com and www.GayRealEstate.com, or call toll free 1-888-420-MOVE (6683).