1. I’m thinking of buying my first home. What steps should I take to prepare?
Ideally you should begin planning for your first home purchase far in advance (when possible) of your projected purchase date. Here is some sound advice for anyone buying their first home or looking to buy “up” into a larger home:
· Start saving money. Some loan products require down payments, some do not. They all however, have fees and costs that you will need ready cash to cover (e.g., closing costs, escrow account deposits, other cash reserves). The more money that you are able to save before you apply, the better off you will be.
· Review your credit. As a lender, we are going to review your credit as part of the normal underwriting process of the loan. Therefore, it is a good idea for you to take an advanced look at what is currently reported by the major credit bureaus. If you need to correct any erroneously reported data, or satisfy (pay) any old judgement liens in order to improve your credit rating you’re looking at a possibly lengthy process. Start early.
· (Totally) free credit reports are available at AnnualCreditReport.com, or
Determine your loan budget. Although your lender may be able to pre-approve you for a larger loan based on your income, make sure that payment doesn’t exceed what you can comfortably afford. Take a look at your budget, determine what payment you are comfortable with, and your lender can look back into the loan amount that payment will cover. Your comfort level may change, but this is a good place to start. Round up your financial documents. This is a general list of documents you will want to bring to your loan application: W-2’s from the last two (2) years tax returns; last two (2) years tax returns for the self-employed, farmers, and the land lords; most recent YTD paystubs; copies if your most recent banking and investment accounts; Real estate contract; and a Divorce Decree (if applicable). Get pre-approved (prior to finding a home/signing a contract)
2. Are there any prepayment penalties charged for these loan programs?
None of the loan programs we offer have penalties for prepayment. You can pay off your mortgage after 6 months with no additional charges.
3. Can I apply for a loan before I find a property to purchase?
Yes. After submitting your application online, one of our mortgage professionals will review your application and credit report. This review will confirm your target purchase price range and eligibility, giving you the knowledge to shop more confidently for that perfect home. Once you have settled on the house you want, give your loan officer a call to begin processing the full application.
4. Are borrowed funds acceptable as a down payment source?
Yes, if that loan is secured by an asset that you own. This source of down payment funds must be seasoned for 2 months before it can be considered. Not only will it be an additional debt to repay, but it will also lessen the amount of income available to service your house payment. If you choose to borrow funds for a down payment, you must fully disclose this new loan on your application.
5. What documents are needed for me to start processing my loan?
Thanks to automated underwriting, the amount of documentation required for processing a mortgage loan is diminished. In general, W-2’s, 2 month YTD paystubs, and 2 months statement from any bank/investment account are all that is required.
6. I own my business and am considered self-employed. How do you verify my income?
If you own more than 25% of any business, you are considered self-employed and must be underwritten as such. Verification of income for self-employed borrowers requires a review of the current and previous years individual tax returns to include all schedules (Schedule C, Schedule E, and Schedule F are typical) plus any K-1’s associated with a corporation or LLC. The most recent 2 years corporate business tax returns are also required.
7. I was in school before getting my job. How should I fill out the previous employer information?
If you were in school before your current job provide us with a copy of your diploma or transcripts and most current paystubs.
8. If the house that I’m buying appraises for more, can I use the difference (equity) towards my payment?
Unfortunately, on any purchase transaction, we are limited to using the lower of the purchase or appraised value. The new appraisal value will be considered 1 year after closing, should you refinance, we can then base your homes equity solely on the appraised value.
9. Can I use a gift as my down payment?
Yes, but the gift must come from a relative of yours or the co-borrowers. Additionally for our conventional loan products, if the gift is less than a full 20% down payment, you must contribute 5% of your own funds. (some of our other loan products have different underwriting criteria. Please contact your loan professional for more information).
10.Will a past bankruptcy or foreclosure affect my ability to obtain a new mortgage?
If you’ve had a bankruptcy or foreclosure in the past it may affect your ability to get a new mortgage. In general most companies that we use require 1 year has passed since the bankruptcy or foreclosure. It is also important that you’ve re-established an acceptable credit history with new loans or credit cards.
11.Will I get a copy of the appraisal?
Yes. Once we receive the appraisal report, we will update the property value in your loan application. Given that we have your email address, we will send you a copy of the new report as an Adobe Acrobat (pdf.) attachment. If not, we can mail a copy or provide one at the closing table.