Question: How do I know how much I can afford?
There are several factors that determine the loan amount and purchase price that you can afford. For qualification purposes, lenders look at income, debt, assets (how much money you have for the down payment, closing fees, points, and other funds necessary to close your loan), as well as credit. There are many different loan programs that offer different terms and rates, and some require lower down payments than others and offer more flexibility in credit and income. The best thing to do is get pre-approved so that you know what loan programs you qualify for, the price range you can afford, and what your monthly payments will be. We will provide a pre-approval at no cost. You can also use our industry leading calculators to find out what your payments would be and determine what purchase price and loan amount is comfortable for you.
Question: How much money do I need to buy a home?
Standard Conventional financing goes up to a 95% LTV, so you only have to have 5% down – there are other conventional programs, however that allow up to 97% LTV, with as little as 3% down, for first time homebuyers. There are also other programs available such as our FHA program that allows you to buy a home with as little as 3.5% down.
In addition to the down payment, you should be aware that there are other fees associated with purchasing a home. For example, there are closing fees, pre-paid interest, and prorated items such as property taxes and homeowner's insurance. Call and speak with one of our licensed Mortgage Advisors to get a better idea of what you can expect.
Question: What's the difference between a pre-qualification and a pre-approval?
A pre-qualification is an informal cursory review of your income, assets, and credit, usually conducted over the phone. Once the necessary information is gathered, the lender issues an estimate of loan amount and purchase price for which you qualify. A pre-qualification still gives a potential buyer a good idea of affordability but it is not as comprehensive as a pre-approval which is a more formal, more intense process where income, assets, and credit are documented and verified. A pre-approval is a conditional approval that holds more weight with a seller and the seller's real estate agent than a pre-qualification, especially if you are competing with another offer. For more information regarding our pre-approval process, please visit this page or talk to one of our licensed Mortgage Advisors.
Question: Do I need a home inspection?
Although a home inspection is not required, it is a good idea to obtain the services of a professional qualified inspector to help you determine the condition of the home you are looking to purchase. A professional inspector will look for any structural issues as well as mechanical problems that may exist in the home that could cause problems in the future. In addition to a structural review, an inspector will also check faucets, toilets, appliances, and other items in the home to make sure everything is in working order. If something needs to be addressed, you can address them with the seller prior to closing.
Question: What type of documentation do I need for a purchase loan?
Standard documentation collected for a purchase transaction includes information regarding your income such as paystubs covering the most recent 30 days, tax returns and W-2s for the last two years, asset information such as bank or mutual fund stock statements covering the last 60 days showing source of funds for your down payment, closing fees, points, pre-paid items, and other funds needed to close your loan. Note that additional items may be required upon the underwriter review.
Question: How long is the purchase process?
A typical period is 30 to 60 days. The time period, defined on the purchase contract and agreed upon by both buyer and seller, is usually what dictates when your loan closes.
Question: What happens at the loan closing?
Typically, you will sign your loan documents at a designated settlement office such as a title company office or attorney's office. In the presence of the signing authority, you will review and sign all your loan documents and then present a certified or cashier's check to pay the remaining down payment, closing fees and other applicable closing funds. You may also wire your funds directly to the title company. Your loan processor will guide you through the process and will advise you on what needs to be done. Once the loan documents are signed, you are the proud owner of your new home. Don't forget to change the locks!