To say the mortgage industry has been transformed in the last six years is an understatement.
Post mortgage meltdown, the changes in the process, paperwork, compliance and regulation have resulted in an experience that can be quite overwhelming, even for the most qualified borrower. For physicians, the process is often complicated further by pay structures, self-employment, contracts and timing of moves versus starting a new position. To best maneuver and plan for that next purchase, refinance or construction, here are a few points to consider.
Timing Is Everything
When relocating or changing employment, it is important to consider that ability to obtain a mortgage can be impacted. In general, self-employed, contract employees and income dependent upon patient volume require a two-year history. The clocks tends to start over when changing markets. For example, a practicing physician who moves to a new city or state to accept a new position as a contract employee with no guaranteed base of pay may have to wait to purchase a home. Also, many loan programs require at least 30 days of pay stubs for salaried employees starting a new position, making it challenging to time the purchase of a home before starting the new job. However, every situation is unique, and programs are available to cater to and accommodate the ones outlined here. Best practice: Be sure to have a qualified mortgage professional specializing in more complicated income situations aid in the planning far in advance.
Documentation — Brace Yourself
Obtaining a mortgage in today’s environment is quite the undertaking. The checklists are long and detailed. This is the case regardless of qualification, income, credit scores or amount of money in the bank. Keep in mind that the documents needed are a reflection of the industry’s widespread abuse in the past. While it feels like a personal attack on the borrower’s credit worthiness, it really isn’t. Best practice : Know going in that it will require a lot of paperwork. Seek a mortgage professional who is capable and experienced at working with those in supporting roles, such as CPAs, investment professionals and attorneys. This will save time and stress.
Pre-planning and Pre-Approval
The question often comes up of how early is too early to get started working with a mortgage professional. The answer? It is never too early. Pre-planning can offer great insights so that financials, income, assets and credit are in the best possible position to get favorable rates and terms. For example, when selling and buying, it makes great sense to analyze the best way to utilize the equity coming from the sale. Often times clients look to put all into the new home. Perhaps it would be best to apply some funds to higher rate debts, build liquid reserves or hold back to perform renovations on the home purchased. Best practice: Look for a lender who takes the consultative approach to make sure the plan is customized rather than put that burden on the client to figure out.
The bottom line is there is plenty of money to lend and qualified clients to buy, build or refinance. Rates are still incredible, the housing market is strong and San Antonio has job growth — the three components of a wonderful real estate market.
Linda L. Rudd, CFP®, Vice President and Senior Loan Officer with Legacy Mutual Mortgage, brings more than 25 years of accomplished lending to her clients. With a strong history in this ever changing and challenging market, Rudd delivers a broad understanding of the right mortgage to suit a variety of financial needs, from the first-time home buyer to the seasoned or luxury buyer. Contact Linda at 210-999-5935 or email@example.com.