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Home
Purchase FAQ - Apply
Now!!
What
should I know before buying a home?
Here are some tips that could save you a lot of
time, money and trouble.
Plan ahead. Establish good credit and
save as much as you can for the down payment
and closing costs.
Get pre-approved before you start
looking. Not only do real estate agents
prefer working with pre-qualified buyers;
you’ll have more negotiating power and an
edge over homebuyers who are not pre-approved.
Set a budget and stick to it. We can help you determine a comfortable price
range.
Know what you really want in a home.
How long will you live there? Is your family
growing? What are the schools like? How long
is your commute?
Make a reasonable offer. To determine a
fair value on the home, ask your real estate
agent for a comparative market analysis
listing all the sales prices of other homes
in the neighborhood and surrounding area.
Choose your loan (and your lender)
carefully. For some tips, see the question
in this section about comparing loans.
Consult with your lender before paying off
debts. You may qualify even with your
existing debt, especially if it frees up more
cash for a down payment.
Keep your day job. If there’s a
career move in your future, make the move
after your loan is approved. Lenders tend to
favor a stable employment history.
Don’t shift money around. A lender
needs to verify all sources of funds. By
leaving everything where it is, the process is
a lot easier on everyone involved.
Don’t add to your debt. If you
increase your debt by financing a new car,
boat, furniture or other large purchase, it
could prevent you from qualifying.
Timing is everything. If you already
own a home, you may need to sell your current
home to qualify for a new one. If you’re
renting, simply time the move to the end of
the lease.
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How much house can I afford?
This depends on three things: your comfort level, the
lender’s
approval and the amount of your down payment. If you’re young
and upwardly mobile you may feel comfortable
stretching to afford a bigger home, knowing that
eventually your increasing income will make the
payments easier as time goes by. But if you’re
older or retiring soon, you may want a lower
mortgage payment that won’t require as much of
your income.
The lender, on the other hand, will be looking
at your credit rating, your income and other
factors to determine how large a mortgage you
can support. back
to top
How do I compare loans?
We offer a number of different loan products
for every situation. Yet, you may also
wish to compare our loan programs with other
lenders. So here are some questions that can
help.
What type of loan will be best for me?
A good lender can point out other loan options
you may not be aware of.
What will my closing costs be?
Ask your lender for an accounting of the
fees and commissions that will be required of
you at closing.
Will I be charged points?
Sometimes a loan is only available if you pay
points, so ask your lender if the loan quoted
requires points.
What items must be prepaid?
Your lender should let you know what items,
such as property taxes and insurance, must be
paid in advance.
How long will I be guaranteed the quoted
interest rate?
This is called “locking in” a rate. Ask
your lender how long your rate can be locked
and if they charge a fee for doing so.
How long will the approval take?
This varies, so get an estimate, especially if
you’re on a deadline.
Does the loan have a prepayment penalty?
If you think you may refinance or pay off the
loan early, you should ask if there’s a fee
involved for doing so.
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to top
How can a shorter term save
me money on a Fixed-Rate Mortgage?
By opting for a shorter term, you can save
thousands of dollars in interest – not only
because you’ll be paying off the loan sooner,
but lenders generally offer better interest
rates on shorter-term loans. And though your
payment will be more each month, it may not be
as much as you may think. The grid below
illustrates the savings on a $100,000 loan at
8.5% interest.
| Term |
Monthly
Payment |
Total
Interest Accrued |
| 30 yr. |
$768.91 |
$176,808.95 |
| 15 yr. |
$984.74 |
$77,253.12 |
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What criteria do lenders use
when approving a loan?
Lenders look at three criteria: Capacity, Credit
and Collateral.
CAPACITY
The lender will weigh your housing expenses
and total debt against your monthly income to
determine your ability to repay a loan.
They’ll also need proof that you have the
cash available for down payment and closing
costs by verifying funds from sources such as
bank accounts, stocks, bonds, mutual funds,
sale of an existing home, or gifts from family
members.
CREDIT
To determine your credit risk, the lender will
look at previous mortgage payment history,
rent payment history, credit card use and
installment debt payment history. If you pay
your bills regularly and on time, you’re
demonstrating the integrity that lenders are
looking for in a borrower.
COLLATERAL
When you ask for a home loan, you’re putting
the home itself up for collateral, so the
lender will want to know what the home is
worth.
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How much documentation will I
need to supply to verify the information I
provided on my application?
Every situation is different. Once you submit
your loan application online you’ll
automatically receive a customized list of the
documents you’ll need to provide. You can
click here for a list of the items you will
need. back
to top
What if I can’t supply the
standard documentation necessary to get a loan?
We offer special loan programs that include low
documentation or even no documentation. You can
indicate how much documentation you’ll be able
to provide in your online application, or you
can call your personal loan consultant for more
details. back
to top
What are the components of a
monthly payment?
Your monthly payment is the sum of four factors,
commonly referred to as PITI (Principal,
Interest, Taxes, Insurance). You may also be
required to pay PMI on a monthly basis.
Principal - The amount of the payment
that is applied to the loan balance.
Interest - The charge paid for
borrowing money.
Taxes - Property taxes. May also be
paid separately to your local government.
Insurance - Lenders require you to
maintain adequate insurance to protect your
home. This may also be paid separately.
PMI (Private Mortgage Insurance) - For
a detailed explanation of PMI, consult the
question about Private Mortgage Insurance in
this section, or see Mortgage Insurance in the
Glossary.
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What is Private Mortgage
Insurance (PMI) and why would I need it?
In most cases, if your first mortgage amount is
greater than 80% of the property’s value, the
lender will obtain Private Mortgage Insurance (PMI)
to safeguard its investment against the
possibility of default. PMI premium is collected
monthly along with the mortgage payment. Within
three days after your loan application is
submitted you’ll be sent an estimate
projecting the amount of the monthly PMI
premium. As your equity increases, you may
qualify to have PMI removed. There may be ways
to finance your home so that PMI is not
required. Your loan consultant can provide you
with more information. PMI is a program which
allows an individual to purchase a home with
less than 20% down
payment. back
to top
How much cash will I need
for a down payment and closing costs?
Depending on your credit and the loan amount,
you may be able to get a home with 0% down.
However, the more you put down, the lower your
monthly payment will be. And if you can provide
a 20% down payment, you’ll avoid the extra
monthly charge of Private Mortgage Insurance (PMI).
Closing costs generally add 1% to 2% to the
final bill. You’ll be asked to provide the
down payment and closing costs in the form of a
cashier’s check at closing.
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to top
What is an escrow
account?
Instead of paying large, lump sums to cover the
costs of homeowner’s insurance and property
taxes, these payments are divided into
installments which are paid to the lender
monthly along with your loan principal and
interest. The lender will hold the money in an
escrow account and make the payments
from the account when they are due. Escrow accounts may be optional, or they
may be required by the lender, depending on the
location of the property, the size of the loan
in relation to the value of the property, and
the loan type. back
to top
What is homeowner’s
insurance?
Homeowner’s insurance is designed to protect
your home. It is also known as hazard insurance,
or fire insurance. While the lender requires
this coverage, you determine which insurance
company will carry the policy. Homeowner’s
insurance premiums are either paid directly to
the insurance agency or by your lender through
an escrow account. back
to top
What is negative
amortization?
This can occur with flexible-payment loans which
allow you, at times, to choose to make a payment
that is lower than the monthly interest you
incur. The difference in interest is then added
to your loan balance. This is called negative
amortization. If the value of your home does not
increase, the amount of equity you have in the
home decreases. However, this type of loan
allows you to qualify for more home because the
initial payments are substantially lower than
those associated with a fixed-rate mortgage. back
to top
How do I prepare for the
closing and how does it work?
Soon after your loan is approved, your loan
consultant will send a list of documents
you’ll need to bring to the closing. You’ll
also be sent an Estimated Settlement Statement
that tells you the funds you’ll need to bring
to closing in the form of a cashier’s check.
Before closing you should conduct a final
walk-through of the property to make sure all
repairs and construction work have been
completed, that there’s no new damage, and
anything meant to be sold with the home is still
in place.
At the closing itself, the legal purchase of
your home is completed. You’ll sign final
documents and provide the cashier’s check.
Depending on where you live, the closing could
be a meeting involving all related parties or a
transaction conducted by a closing agent without
a formal meeting. back
to top
Can I get a loan if I’m
not a U.S. citizen or if I live outside the
country?
Yes. As long as the property you are buying or
refinancing is in the United States, you can
apply right here online. We offer special
programs for foreign nationals and resident
aliens. Call one of our loan consultants
toll-free to find out more. back
to top
Can I finance a vacation
home?
Yes. We have aggressive programs to help
borrowers purchase or refinance a second home.
To get started, you can Get A Loan or call us
toll-free. back
to top
Can I finance an investment
property?
Yes. Just Get A Loan or call us toll-free and
find out all the ways we help you secure
purchase and refinance loans on investment
properties. back
to top
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