Most mortgage lenders use some variation of the “Uniform Residential Loan Application,” a document drawn up by Fannie Mae and Freddie Mac, two huge government-backed corporations that buy mortgages from lenders. The uniform application divides loan applicants’ assets into two categories: liquid and non-liquid. Liquid assets are those held in cash or easily converted to cash, including checking and savings accounts; stocks, bonds and other securities; and life insurance policies with a cash value. Non-liquid assets are harder to convert into cash but are still valuable. They include real estate, cars, assets in retirement plans, businesses owned by the applicant and any other item of material value. (Got a rare stamp collection? List it under “other.”)
Your assets are the things you own. Before they will approve you for a loan, mortgage lenders typically require that you have a job or some steady source of income that will allow you to make the payments. But they also recognize that people can lose their jobs, and other income sources can dry up. That’s why they like to see applicants with other assets that they can convert to cash, if necessary, to keep up with their house payments.
The mortgage process can be very frustrating, but there is a reason why lenders need to be extra cautious that all their documentation is correct.
The sole reason lenders exist is to make money through the fees they collect during the mortgage process and the process they make when they sell the mortgages. YES, after they make the loan, they SELL your mortgage after closing. Investors buy huge amounts of mortgages in large bundles, and to insure they are buying ‘good’ loans, they audit the loans AGAIN. If your lender fails to have all required documentation, they may have to ‘buy back’ a defective loan, which is incredibly costly to the lender.
Defective loans caused the real estate meltdown in 2008, which caused investors to put more stringent safeguards in place to prevent this from happening again.
One of the biggest challenges is borrowers who wait until the last minute to get requested documents to the loan processor. It is not uncommon for the documentation provided to require more information, so my advice for homebuyers who want the smoothest possible transaction is to submit all requested documentation ASAP! Do not procrastinate… you might think that one day might not make a difference, but every single day counts when you trying to meet a closing date or rate lock deadline.
We work with several lenders that do business in the Nome area and are happy to help with giving you a referral to lenders who have been successful with loaning money in unique situations. Feel free to give us a call if you have any general questions about the lending process.
One of the challenges with living in Nome is something that people in the Lower 48 take for granted….the access to hazard insurance for your home. One of the most important factors in the monthly payment for your home is the cost of your insurance. Rate quotes vary greatly from agent to agent, insurer to insurer. I have worked with several different companies and am always happy to refer you to agents who have proven to be easy to work with and carry insurance products that are cost effective.
A large portion of Nome is located in the flood plain and will need to purchase flood insurance, as traditional homeowner policies do not cover flood damage. Even if there is no history of flooding at the site, if your property is located in the ‘flood plain’ your lender will require this type of coverage.
Buyers of investment properties also special coverage; premiums on homes where occupants are non-owners tend to be slightly higher than for owner occupied properties.
For a comprehensive list of insurance companies that do business in Nome Alaska and an estimate of what the rates will be, please click HERE.