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Frequently Asked Questions
Some borrowers begin looking for a home before they meet with their Lender. While you are not required to secure financing before you pick a property, it is in your best interest to meet with a Loan Professional to determine the amount of loan you will be able to afford before you sign a contract. Because pre-approval includes a credit check, it is more powerful than a prequalification letter, which only estimates what you can afford based on a few simple calculations involving your income and debts. Becoming pre-approved lets you: - Shop for a home with the confidence of knowing that you will be able to afford the mortgage.
- Write a more attractive sales contract as sellers may give preferential treatment to pre-approved buyers.
- Find out about possible qualification problems early in the homebuying process.
In order to be pre-approved you will need to provide your loan officer with detailed information and documentation regarding your total financial picture. Your loan officer will review your financial situation, discuss mortgage options with you, and if you qualify, provide you with a written letter for a specific loan amount, down payment, and interest rate subject to terms and conditions (i.e. property appraisal).
The following items are required for loan applications: - valid driver's license or Military ID
- name, address and phone number of all landlords for past two years (if applicable)
- all paystubs for the most recent 30-day period
- verification of other income- alimony, child support, retirement or social security
- most recent two years' W-2s for all borrowers and jobs
- if you are self-employed, a copy of Federal tax returns for the past two years', a YTD Profit & Loss, K-1 and 1099s
- Last two consecutive months' bank statements from all asset accounts (banking, investment, retirement)
- copy of sales contract (if available)
- for VA loans- Certificate of Eligibility, Statement of Service of DD214
Loan pre-qualification can occur in a matter of minutes, in the time required to communicate your financial circumstances to a lending professional so they can crunch the numbers. Loan pre-approval could require up to several days to review the application and file once the applicant's income, asset and credit documentation has been received in full.
With the advances in technology and the resources available today, many buyers choose to find a home on their own. It is important to note, however, that Real Estate Agents are often made aware of properties for sale before the general public. They can help you find a home that meets your needs much quicker by selecting properties for you to see based on the criteria that you give them (neighborhood, amenities, schools, etc). Your Real Estate Agent will advise you on how to write an attractive sales contract and will also work as a negotiator between you and the seller and his/her listing agent. If you do not have an agent, your loan officer will be happy to recommend a reputable one in your area.
Private mortgage insurance (PMI) is paid by the borrower to protect the lender in the event that the borrower defaults on the mortgage. Mortgage insurance is generally required on loans that exceed 80% of the value or purchase price of a property. It can also be required at other times if the lender perceives a higher risk associated with a particular loan program. There are financing options which allow limited down payment borrowers to reduce the amount of mortgage insurance required. Your loan officer will explain each available option to you so that you can decide the best financing option for your unique situation.
Homeowner's insurance protects both the owner and the lender against physical damage to the property (i.e. fire or burglary). Some perils are not generally covered by the standard homeowner's polices, for example floods and earthquakes. Homes located in flood prone areas may require separate flood insurance. Properties located in areas prone to fires and windstorms may have difficulty obtaining standard insurance policies.
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Your homeowner's policy must be for an amount equal to or greater than the value of the dwelling as stated in your appraisal. Lenders prefer and may require that you also have guaranteed replacement cost coverage, which will generally pay out 20-50% more than the face value of the policy to rebuild your home in the event of severe damage. A replacement-cost policy typically adjusts the amount of insurance each year to keep pace with rising construction costs in your area.
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The master insurance policy, which is purchased on behalf of all unit owners by the HOA, covers all units or structures located within the development but does not typically cover an individual unit owner's personal belongings located within their dwelling. Therefore, it is advisable to purchase a separate contents coverage policy for the protection of personal possessions.
Your loan officer will advise you when your first payment is due based upon your closing date. You will receive a First Payment Letter and two temporary payment coupons in your closing package. If you do not receive a statement or payment booklet before your first payment is due, you MUST make your payment. Use the temporary coupons and follow the instructions from your closing package. If at any time you have a question about your payment due date or where it should be sent, please contact our customer service department at (800)748-2147.
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