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| HUD house |
Questions To LEnder for Home Loan
1. What is
the price of the house I can afford?
The lender will ask you about
your employment with open questions such as:
Who do you work for? How long
have your been there? What is job title? How are you paid?
They need to show you have two years same type of income.
You can’t from W-2 earner to self employed because you won’t have two years IRS
income taxes to show the net income that you earn. You can however go from
college to new job with one paystub. OR from self employed to W-2 with a
contract if the employer is not a family member. These are for a conventional
loan or government loan such as FHA, USDA. Qualfied loans are ones where the
Borrower’s income to the total proposed debt is under a certain percentage. All
debt on credit report is added to the new principle. Interest, taxes, insurance
and HOA.
There are other types of mortgages which you can use your
bank statements as income. The interest rate on a bank statement loan will be a
bit higher than on one that the Borrower qualifies with w-2 and IRS taxes. There
are bank statement loans where the deposits are averaged to show as your
income. Typically, half the total deposits in 24 or 12 or 1 month are cut in
half to represent total monthly income.
There are also alternative or hard money loans at high rates
to solve temporary problems. Don’t take a high interest rate loan unless you
are certain you can get out of this or sell.
2. What type
of loan - FHA, VA, Conventional
Federal
Housing Administration doesn’t actually Underwrite or buy your mortgage. FHA
insures the loan in the event of a default. Default is if you don’t pay and the
house is foreclosed upon. FHA gives the lender a little cushion if you don’t repay
because FHA loans can be 96.5% of the property value. You will pay mortgage
insurance until you sell or refinance with equity to do a conventional loan.
FHA is good for first time buyers, or those with little down payment. It is
limited by the County where the property sits.
VA If you are a qualified the VA
loan is guaranteed by the United States Department of Veterans Affairs This great
benefit is for American veterans, military members
currently serving, reservists and select surviving widow or widower who didn’t marry
again.
Conventional loans require three percent down minimum but have more
strict credit and debt to income ratio qualifying rules than FHA. With a high
loan to value conventional loan the mortgage insurance is not permanent as with
the FHA. If value increases or you pay down the loan to seventy nine percent of
value ask the Servicer in writing (send an appraisal or Broker price opinion, I
help my clients for free). Some loans may have wait period, see your promissory
note.
Other types of loans available: Bridging your house listed for sale combined
with house you plan to buy, Bank Statement Loans, Asset Depletion Mortgages,
Hard Money and many more. This last category may not have higher interest rates
due to risk. A mortgage broker usually has a product for everyone, but not always
the price they want.
3. Down
payment assistance options
Depending on location of the property there are grants, down payment help,
silent seconds and Mortgage Credit Certificates Not all of these require that
you are first time owner or haven’t owned on IRS returns in three years. Some
have income limits which keeps the total dollar amount available mostly under
conforming loan limits.
4. How much
money do I need?
I addition to
the down payment you will typically pay for escrow, title, recording, appraisal,
Underwriting, processing, property taxes, fire insurance, inspections, and per
dium interest. You may also negotiate property condition items if you are still
under the contingency date. The Lender can give you’re the numbers. Yes, you
can ask the seller to pay or split some costs; but most often this is done with
your initial offer.
5. What FICO
score do I need?
Your payment
record in the past four years determines one piece of the interest rate you
will pay. The higher the FICO score the lower the rate. Ask about the program
you want and what is minimum score number. Pay everyone on time, this is NOT
the time to close an account or go buy furniture or a new car. Credit can be
fixed, if you have time ask C. G. about strategy to increase the FICO.
6. Type of
property single family, units, condominium, townhouse
The type of
property you choose has effects on pricing and qualifying. Single family
detached housing is considered the most optimum for resale, and thus the
interest rates for this property type will be a bit less expensive in interest
rate and more forgiving in loan to value, programs and more likely to allow for
exceptions. Think of all the factors as layers or blankets and the warmer you
get with covers the lower the rate. Townhouse or attached or Planned unit
developments are other property types. Condominiums have a certain set of risk
which is inherent in the Association. Is the Association financially solid? Is
the Association involved in a lawsuit that may cause unexpected costs? What is
the nature of the lawsuit? Rural properties also have certain types of risks to
review such as the septic tank, well, road maintenance agreements, prior use,
and services available to be inspected as sound, ongoing and not to cause unexpected
costs.
7. How to
communicate with Lender
The lender is
a real person, hopefully you didn’t apply on an internet lender who seemed
cheaper but you keep getting a new person on the phone. When you choose to work
with C. G. she is available to answer your questions seven days a week. Once
you make your offer you need to ne in contact with the lender by email every
day from Monday to Friday. The process of gathering information is not cookie
cutter and communication is vital. This is not the time to go on vacation and
go dark. Estimates will be emailed to you three to five times and each time
these must be opened and acknowledged or a non-answer holds up the process. The
first estimate you must agree to accept emails and esign the documents. You may
call or email CG to tell her if there are any corrections needed on the application.
You can of course agree to only receive the documents by US mail but this slows
the processs by about ten days due to delivery time and need to have wet signed
paperwork by about ten days. C. G. has a website where you may upload your
income, assets, letters of explanation and other paperwork but it is best to
email documents as pdf. Taking a photograph of your ID and sending a blurry pdf
will slow down the time line. Look at the image and see if fine print is readable.
Bank statements can be downloaded from you bank’s website and saved as “the
month name bank name” then emailed to her secure email cgerardo@cmgfi.com IF you are showing the earnest money cleared
your account or gift funds cleared someone’s account, please save a screenshot of
the running balance/ then ins and outs WITH the URL of the bank at the bottom of
the page.
8. Rates terms
time frame for lock
Rate locks
are priced in increments of days. The longer number of days the cheaper the
interest rate pricing. You also have a time frame to close if you are doing a
purchase loan. You will need to lock at least ten days before the close date.
Generally, it is cheaper to lock Tuesday through Thursday. Bad news makes interest
rates flow downwards and rates change twice a day. C. G. will guide you but not
tell you when to lock.
9. Experience
of the loan officer or broker
Closing a
mortgage loan is the most expensive financial transaction you will make in your
life. C. G. has thirty years as a mortgage banker and has seen every situation.
C. G. believes everyone should be able to get a home loan.
10.Time
frame time of year time to close
Home
purchasing is most active in June and July. Mortgage banks and lenders are
subject to the whim of the Ten Year bond market, when rates fall they have
influx of business. These two factors are beyond your control; but, are interesting
to point out. If you send in your documents requested during the morning before
11:00 she will review by the end of same the day. A preapproval submitted with
two years IRS returns and W-2, bank statements for past sixty days, and pay stubs
by 10:30 AM will have a letter the following day. There may be questions about
your paperwork, be available by phone and email. Texting, though seems fast for
short messages is not careful enough to process a home loan.
11. Do I
feel comfortable talking about my divorce, bankruptcy, job changes, secrets?
You will
need to provide Divorce Decree, Bankruptcy Docket Summary, ages of your
children, what dates and where you worked in the past seven years and more. Lenders
check and double check everything. The best practice is to be open and explain
upfront so we can together deal with the issue. think of this as confession and I keep everything locked down.
What customers say about me is this:
What customers say about me is this:
