Month: July 2013

The mortgage process is infinitely more complex than it was even five or ten years ago. The level of documentation that is now required, and the scrutiny that the documentation undergoes, is staggering, and rightly so, as mortgage fraud is rampant, despite industry efforts to combat it.

Respond quickly to requests

The best thing you can do to keep the process moving is to promptly respond to whatever requests your lender makes of you. Whether it’s a piece of documentation or perhaps a letter explaining some aspect of your mortgage application, you should respond quickly. Chances are it’s urgent.

Your lender needs this level of detail, because it’s more than likely that your loan will be bundled with other mortgages and sold to investors, and perhaps to other investors after that. If your current lender fails to provide thorough documentation, or misses something in the underwriting process, your mortgage might not be able to be sold to investors. This would be a major issue for your lender, as he or she could incur large losses.

Everything in its place…or your file sits

Another reason to be particularly cooperative in dealing with your lender is that, to minimize the need to review files several times, most underwriting departments will only examine files when all of the conditions have been provided. If the underwriter is looking for five items and you provide four, the file will sit until the fifth item is provided. What are called underwriting gatekeepers ensure that all is in place before the file moves forward.

Your mortgage professional is like a middleman between you and the underwriter. It’s up to him or her to get your information to the underwriter. Everything he or she requests has an important role within the process.

And it’s important to keep the process moving. For your own sake.

With flooding becoming more common in our ever-changing climate, you may be thinking about flood insurance. The main thing for you to keep in mind – especially if you have a basement – is that most standard property insurance policies won’t cover flood damage to your home. You will need special flood insurance. If you do plan on obtaining coverage, here are a few things you should know:

Flood zones

A flood zone is an area designated by the Federal Emergency Management Agency (FEMA) as being at specific risk of flooding. Many areas have flood zones within them, or are at least at some risk of flooding. If you are buying a new home, be aware that lenders always require flood insurance for homes in a flood zone.

If your insurance agent tells you that a property you plan to purchase is considered to be in a flood zone, and you believe otherwise, you are able to protest that decision. In many instances, part of a property, such as waterfront, will be in a flood zone, but the lowest part of the actual structure is at a much higher in elevation than the flood zone.

Keep in mind that when you shop for flood insurance, according to the National Flood Insurance Program, a one-to-four family structure can receive up to $250,000 in coverage for the structure itself and another $100,000 for the contents of the structure.

Changes have been made to the program, so ensure you discuss coverage with an insurance professional.