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Frequently Asked Questions
The first step is to talk with one of our experienced loan officers to determine the what will best meet the needs for your particular situation. The loan officer will explain the loan programs fully and work with you as much or as little as you desire. Your options include: applying online through our secure website, application by phone or a personal appointment. In all cases, you will complete an application and may need to provide employment and/or financial documentation.
When applying for a mortgage you may be quoted a simple interest rate that is available at that moment. In order to be insured the rate you are quoted is available at your closing time, the lender must lock in the interest rate for a term for as long as they predict it may require to process your loan. The longer it takes to go to closing the higher the interest rate lock in will cost. Typical lock periods are 30-60 days. Alternatively, especially if you think interest rates are trending lower you may choose to allow the interest rate to float and except whatever the prevailing interest is once you are closer to your closing date.
The amount of mortgage you can afford is determined by how much you earn vs how much your minimum monthly payments are. Based on the type of mortgage that is right for you, there are ratio guidelines that analyze your expenses. Those ratios range from 28% - 55%. interest rates are trending lower you may choose to allow the interest rate to float and except whatever the prevailing interest is once you are closer to your closing date.Back to List
To determine what your ratios are you first need to determine your gross monthly income. Your monthly housing expense payment should not exceed 28% of this amount. Next, calculate your monthly debt load. This includes credit cards, loans, alimony, child support and any other ongoing monthly obligations. Add it all up and this is your monthly debt load. Your monthly housing expense and total monthly debt load should not exceed 36% of your gross monthly income. These calculations are general guidelines and we have many other programs available that allow your expenses to exceed these figures. This is where you may benefit by discussing your situation with one of our professionals to determine your ratios for accuracy as well as discussing the available programs which allow your monthly housing expenses to exceed these examples.
The best mortgage is one you can afford as long as you plan to remain in the home and save the most money. Affordability varies with the type of mortgage. The two most common are fixed(FRM) rate mortgage and adjustable-rate mortgage (ARM) of varying terms.
A fixed-rate mortgage is consistent for the length of the loan, usually 30 years. Shorter term mortgages may offer lower interest rates however higher payments will apply but less money paid out than a longer-term loan. Long term fixed-rates have a smaller monthly payment and are easier to budget. ARMS's initially come with rates lower than a fixed rate mortgage but periodically rise or fall, depending on economic factors. Its lower initial rate (which can be fixed for up to 10 years) can help you qualify for a larger loan. If you plan to move in a few years, this type of ARM is a great choice
First time home buyers typically require less money down and good - but not perfect - credit to buy a home. Don't let a couple of old "late payments" on a credit card or lack of a large downpayment keep you from becoming a homeowner!One of the most popular programs is the 0% down payment loan. This is ideal for those who are looking to minimize out of pocket expenses when buying their first home. If you qualify, there is also the benefit of rolling in up to 3% of your closing costs.
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Knowing what you can afford is the first rule of home buying, and that depends on how much income and how much debt you have. In general, lenders don't want borrowers to spend more than 28% of their gross income per month on mortgage payment of more than 36% on debts. It pays to check with several lenders before you start searching for a home. Most will be happy to roughly calculate what you can afford and pre-qualify you for a loan.
The price you can afford to pay for a home will depend on six factors:
1. Gross income
2. The amount of cash you have available for the down payment, closing costs and cash reserves required by the lender
3. Your out standing debts
4. Your credit history
5. The type of mortgage you select
6. Current interest rates
Another number lenders use to evaluate how much you can afford is the housing expense-to-income ratio. It is determined by calculating your projected monthly housing expense, which consists of the principal and interest payment on your new home loan, property taxes and hazard insurance (or PITI as it is known). If you have to pay monthly homeowners association dues and/or private mortgage insurance, this also will be added to your PITI.
This ratio should fall between 28-33%, although some lenders will go higher under certain circumstances. You total debt-to-income ratio should be in the 34-38% range.
Bankruptcies and foreclosures can remain on a credit report for 7-10 years. Some lenders will consider a borrower earlier if they have reestablished good credit. The circumstances surrounding the bankruptcy can also influence a lender's decision. For example, if you went through a bankruptcy because your employer had financial difficulties, a lender may be more sympathetic. If, however, you went through bankruptcy because you overextended personal credit lines and lived beyond your means, the lender probably will be less inclined to be flexible.
No, we have many programs specifically set up for self-employed borrowers. No income verification programs are available even if there are credit problems.
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