Frequently Asked Questions
What items do I need to apply for a loan? • Last 2 W2’s, & most recent pay
stub. If you are self-employed, or receive rental income, you will need the
last 2 tax returns. • Your most recent liquid asset statements. (bank
statements, retirement accounts, etc…) • Name and phone # of your insurance
agent. • Copy of your sales contract. • If a refinance, your most recent
Mortgage Statement.
What is Mortgage Insurance (PMI)?
Mortgage Insurance is a fee that is added onto your loan by the lender
because of the layer of risk that is associated with owing more than 80% against
your home. The amount of Mortgage Insurance you will pay on your loan, is
determined by the loan amount, the LTV (your loan amount divided by the value of
your home), and the level of approval that your loan receives after it is
underwritten. We usually try to avoid doing loans with mortgage insurance by
setting the customer up with an 80/20 (this is a 80% 1st Mortgage, and a 20% 2nd
Mortgage). The 80/20 scenario usually saves our customers quite a bit of money
if they qualify for it.
Why do I need a Pre-Approval?
Any time you are looking to buy a home, you should always consult with
a mortgage specialist first to find out how much of a house you qualify for.
Most real estate agents will require a pre-approval letter before allowing you
to put a contract on a house. If you are a first time home buyer, it is best to
get pre-approved at least a few months in advance so that you know your credit
is where it needs to be in order to be able to buy a home. A pre-approval is
based on your credit scores which are pulled from the 3 major credit bureau’s
Equifax, Experian, & TransUnion.
What are closing costs?
Closing costs vary on the loan scenario. Every loan, no matter who you
use, will have an appraisal fee, title fees, and some sort of lender fee. The
lender fees vary on the lender. Every lender has different fees. If you are a
customer who has less than perfect credit, you should always expect the fees to
be higher than someone with excellent credit. The reason for this is because
the lenders who do these loans almost always have higher fees.
Will I be charged points on my loan?
Usually no! The only time we charge points, is when we are buying down
the rate for the customer, at the customers request. But we will always give
you a scenario that does not include points, because most of the time it is the
best option for you. Remember we are here to help you not hurt you! If you
have someone charging you points, and are not giving you any other options, you
need to consult with another company.
What will my interest rate be?
This is the most commonly asked question, and nest to be answered by a
qualified lender. You can’t give someone an accurate rate without knowing their
credit score, their monthly income, the amount they plan on putting down on the
home, and whether or not they have any additional assets. All of these factor
into what your interest rate is going to be. For example someone buying a home
with 20% down and a credit score of 580 is going to have a different rate than
someone wanting a 100% loan with a credit score of 720.
How much do I need to put down to buy a home?
Depending on your credit score, there are a number of loan programs
available. Many times, you may not be required to put any money down, or as
little as $500. But most of the time I would expect to at least be ready to put
down roughly $2,500 for closing costs, taxes and Insurance. Those are all
unavoidable fees that are affiliated with the loan.
What if I just got out of Bankruptcy, or I am still in it?
There are lenders that specialize in those types of loans, and depending on your
credit score, most of the time can help you.
