| Q. 1 : |
Should we be pre-qualified before looking for a new home? |
| Ans : |
Yes! It’s actually easier to buy a home if you know in advance that you will be approved. You can make arrangements with most lenders to be "pre-qualified" for your purchase. Here's how to do it:
- Make an appointment to see your lender. Take your financial information, such as bank statements and W-2 forms, as well as paycheck stubs.
- The mortgage company will access your credit report and review your documents. At that time, you will be able to discuss different financing options and decide which type of loan is best for you.
- The mortgage company will access your credit report and review your documents. At that time, you will be able to discuss different financing options and decide which type of loan is best for you.
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| Q. 2 : |
What steps need to be taken to secure a loan? |
| Ans : |
The first step in securing a loan is to complete a loan application. To do so, you'll need the following information.
- Pay stubs for the past 2-3 months
- W-2 forms for the past 2 years
- Information on long-term debts
- Recent bank statements
- Tax returns for the past 2 years (in some cases)
- Proof of any other income
- Address and description of the property you wish to buy
- Sales contract
During the application process, the lender will order a report on your credit history and a professional appraisal of the property you want to purchase. The application process typically takes between 1 and 6 weeks. |
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| Q. 3 : |
How can I find out information about my credit history? |
| Ans : |
There are three major credit reporting companies: Equifax, Experian, and Trans Union. Obtaining your credit report is as easy as calling and requesting one. Once you receive the report, it's important to verify its accuracy. Double check the high credit limit, total loan, and past due columns. It's a good idea to get copies from all three companies to assure there are no mistakes since any of the three could be providing a report to your lender. Fees ranging from
$10-$30 are usually charged to issue credit reports, but some states permit citizens to acquire a free one. To acquire your credit report, contact the reporting companies at the numbers listed below or order credit reports online via the reporting companies' websites.
CREDIT REPORTING COMPANIES
Experian (www.experian.com) or 1-888-397-3742
Equifax (www.equifax.com) or 1-800-685-1111
Trans Union (www.transunion.com) or 1-800-916-8800 |
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| Q. 4 : |
How do I choose the best loan program for me? |
| Ans : |
Your personal situation will determine the best kind of loan for you. By asking yourself a few questions, you can help narrow your search among the many options available and discover which loan suits you best.
- Do you expect your finances to change over the next few years?
- Are you planning to live in this home for a long period of time?
- Are you comfortable with the idea of a changing mortgage payment amount?
- Do you wish to be free of mortgage debt as your children approach college age or as you prepare for retirement?
During the application process, the lender will order a report on your credit history and a professional appraisal of the property you want to purchase. The application process typically takes between 1 and 6 weeks. |
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| Q. 5 : |
Are there special mortgages for first-time homebuyers? |
| Ans : |
Yes. Lenders now offer several affordable mortgage options which can help first-time homebuyers overcome obstacles that made purchasing a home difficult in the past. Lenders may now be able to help borrowers who don't have a lot of money saved for the down payment and closing costs, have no or a poor credit history, have quite a bit of long-term debt, or have experienced income irregularities. |
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| Q. 6 : |
Can non-citizens qualify to buy a home? |
| Ans : |
Each loan type has different guidelines for citizens of other countries. FHA requires that the home you are buying in this country is your primary residence. You must have a Social Security card, as well as all of the other documentation required for FHA buyers. Fannie Mae requires that you have permanent resident alien status - a green card. If you are a nonpermanent resident alien, an additional down payment, as well as permission to work in the United States for extended periods through a work visa is required, and you must occupy the property. Freddie Mac underwrites loans for permanent and nonpermanent residents alike, with no special requirements for the latter. It is important that you make an appointment with your lender before you select a home so that you will be aware of the financing available for your particular situation. The great news is that homeownership is encouraged for everyone in this country. |
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| Q. 7 : |
How large of a down payment do I need? |
| Ans : |
There are mortgage options now available that only require a down payment of 5% or less of the purchase price. Some mortgages don't require a down payment at all. But the larger the down payment, the less you have to borrow, and the more equity you'll have. Mortgages with less than a 20% down payment generally require a mortgage insurance policy to secure the loan. When considering the size of your down payment, consider that you'll also need money for closing costs and moving expenses, and possibly decorating or new furniture. |
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| Q. 8 : |
What is a good faith estimate, and how does it help me? |
| Ans : |
It's an estimate that lists all fees paid before closing, all closing costs, and any escrow costs you will encounter when purchasing a home. The lender must supply it within three days of your application so that you can make accurate judgments when shopping for a loan. |
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| Q. 9 : |
Why do mortgage interest rates go up and down so dramatically? |
| Ans : |
Many years ago, savings and loan institutions made up the majority of home mortgage loans. They would often set a rate for new home loans for long periods of time - up to a month or so. As the lending industry has evolved, the buying and selling of mortgages has become very sophisticated and there are many different investors making new home mortgage loans. The easiest indicator you can follow in watching the direction of interest rates is the bond market. Although interest rates usually have long periods of decline or increase, there are many days when rates may jump up or down dramatically -just as the bond market can. These are called "hiccups." When rates begin to go higher for a long term, it will be (as history has proven) a slow, steady increase. It is the trend you will want to follow. Is the overall trend up or down? Don't let those daily "hiccups" alarm you. |
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| Q. 10 : |
Is there anything we should know about new construction financing? |
| Ans : |
Your loan will be approved well in advance and you will want to be prepared as your home progresses and you prepare to close. The following is a list of five helpful hints:
- Be sure you understand and can comply with all of the conditions of your loan approval.
- Let your lender know of any changes to be made to the house, the sales price or any contract changes.
- Do not make any changes to your financial position without consulting your lender. For instance, it may not be wise to buy a new car before closing your mortgage loan if it affects your loan approval.
- Save copies of all major paperwork that might influence your loan. For example, save copies of any bonus checks you might receive.
- Notify your lender when you are within 60 days of closing. You will probably be at the building site and in communication with the builder to know this approximate date. It is important to notify your lender so that any updates that are necessary can be made.
For additional information about mortgages and financing your home, please visit our partner CTX Mortgage at www.ctxmortgage.com |
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