FAQ

A home loan is based on 5 things:

• Credit
• Income
• Assets
• Work history and the property you are buying.

To get started, complete our online quick app and upload current pay stubs, W2’s and bank statements to your personal secure portal.

We keep it simple so you can relax and we’ll do the pre qualifying.

There are 4 main types of home loans and then out of the box loans for the real estate investor and the self employed. However, most people fit into one of the 4 main loan types. Here’s a rundown of the loans and their differences:

• FHA- requires 3.5% down and charges mortgage insurance on all loans
• VA- requires ZERO down payment and most veterans have a funding fee that is included in the loan amount upfront to cover their specific mortgage insurance. No extra monthly mortgage insurance being paid.
• USDA- requires ZERO down but is only available in select rural areas and also charges mortgage insurance, but at a lower rate.
• Conventional Loan- Start at 3% down and is more credit sensitive. Mortgage insurance is required on all loans with less than a 20% down payment and the mortgage insurance rate is determined by credit score, how much you are putting down and the type of property you are buying.

Your loan originator is licensed and can speak to each of the loans above and help you determine what is the RIGHT CHOICE for you.

Buying your first home doesn’t take 20% for a down payment like most people think. The type of loan you are applying for will dictate how much of a down payment is required.

For Example: FHA loans require 3.5% down payment at a minimum, Conventional loans starts at 3% down, USDA and VA loans require zero down payment.

Let’s pretend you are buying a home for $100,000. If you do not have the full $100,000 to pay the seller in cash then you will need a home loan.

Each of the loan types above have a minimum requirement.

For Example: FHA loan requires the buyer to bring in $3500 and the investor will lend you based off the FHA requirement $96,500. On the other hand, if you are applying for a VA or a USDA loan the investor will lend you all $100,000 if you meet their qualifying requirements. It is important to partner with a lender who will explain all your options to you and maximize your purchasing power.

NOTE: a down payment is different from “closing costs”. Closing costs are the fees for you to acquire property.

There are monies due from a buyer when purchasing a home. This includes a down payment and closing costs. First time Homebuyer programs or Down Payment Assistance Programs can help pay for some of the down payment and closing costs. We will cover that as a separate topic.

Lets’ dig into closing costs:
Closing costs are the cost for you the buyer to acquire property. The seller has closing costs as well to sell the property. The fees are paid to third parties who are required to participate in the transaction.

It is important to note when you are shopping for a lender the closing costs below will be the same no matter who does your financing. The only part that changes per lender is the interest rate, program they offer you and the lenders fees. Unfortunately some lenders will undercut the actual closing costs to make their estimate seem more appealing and then give you a surprise of more money due once you are in escrow. That is one reason you choose to work with someone trustworthy and forthcoming.

Examples of Closing Costs

• Appraisal: Paid to the Appraiser for completing an appraisal report so you can receive financing on the property. The appraisal is done specific to the type of loan you are requesting and fee ranges from $475- $1000 depending on the loan program and how it is being appraised.
• Appraisal Reinspection Fee: Should the appraiser need repairs done to the property or require adjustments they can charge an additional $100+ to recertify or complete the appraisal for the buyers financing.
• Lender Fees: If you cannot pay cash for the home you will need a lender to prepare and approve your loan. Fees range from $799-$2500.
• Credit Report Fee: Just like when you apply to rent a property you pay a credit report fee so the property management company can review your current credit standing, the mortgage lender needs to have current credit to provide an underwriting decision. 
• Flood Cert Fee: If a property is in a flood zone you will need additional insurance that covers flood. The flood ratings are done through FEMA and to pull a certification is $15-$20.
• Escrow Fee: Escrow is an independent company that manages the transaction and monies. They do a lot behind the scenes and escrow charges start at $1000 and go up. Title Insurance: When property is being sold, we need to know that the person who is selling the property has the right to sell it. We need to make sure any liens they have and owe on the property are being paid off so the buyer does not become liable and that the buyer does not have any liens that will attach to the property. This affects the lender approving the loan. It is a policy that covers the transaction-should there be any issues in the future you can partner with the title insurance company to handle them since they are ensuring it is a clean transaction. Policies start at about $1000.
• Notary Fees: When a Notary sits with you to sign your final documents it takes about an hour and they certify and notarize certain forms. The notary signing will be approx. $250 depending on travel and how many people sign. A notary who does a mortgage signing is trained in the home loan requirements.
• Recording fees: The county that the home is in will charge a fee to accept the deed and record into the buyer’s name. Depending on how many forms are recorded the fees can differ. $200 is a fair estimation.
  There is also a fee to the buyer called “Prepaids” – It is technically separate from closing costs but still due as a fee at the close of escrow.

Appraisals estimate a home’s value with fresh eyes
Just because you and the sellers have agreed on a price does not mean it’s a done deal just yet—The appraisal rates the collateral for the loan. If for some reason you end up unable to make your mortgage payments, the lender will have to foreclose on your home, then sell the property to recoup its costs. So, we have to know the value of your future home before handing over that large chunk of change.

An appraiser is an independent license third party. They don’t have the same job as a home inspector, who examines every little detail. While an appraiser will pay particular attention to problems with the foundation and roof, the home appraisal process includes noting the quality and condition of the appliances, plumbing, flooring, and electrical system. With data in hand, the appraiser compares your property to other like properties in the area that have sold recently to make their final assessment. The full report is sent to us and then reviewed by the underwriter to make sure it meets the collateral guidelines for the type of loan you are applying for. It is your appraisal and you will receive a copy of it for your records through the transaction.

Home Insurance:
As a homeowner you will need to have insurance on your new home. We recommend you call 2-3 companies and obtain a quote from each to compare. All insurance policies are not the same so be sure to review the different coverages. The insured amount will be your total loan amount or replacement cost that the insurance company or appraiser can provide. We do need the quote early in the transaction from the company you wish to use as it is part of your underwriting/approval process. Please have your estimate to us no later than 10 days after you open escrow to avoid processing delays. If you need a referral let us know and we can provide you our top 3 insurance providers.

Appraisals estimate a home’s value with fresh eyes
Just because you and the sellers have agreed on a price does not mean it’s a done deal just yet—The appraisal rates the collateral for the loan. If for some reason you end up unable to make your mortgage payments, the lender will have to foreclose on your home, then sell the property to recoup its costs. So, we have to know the value of your future home before handing over that large chunk of change.

An appraiser is an independent license third party. They don’t have the same job as a home inspector, who examines every little detail. While an appraiser will pay particular attention to problems with the foundation and roof, the home appraisal process includes noting the quality and condition of the appliances, plumbing, flooring, and electrical system. With data in hand, the appraiser compares your property to other like properties in the area that have sold recently to make their final assessment. The full report is sent to us and then reviewed by the underwriter to make sure it meets the collateral guidelines for the type of loan you are applying for. It is your appraisal and you will receive a copy of it for your records through the transaction.

When you do not put a large sum of money down (20% or more) and have the credit history that qualifies for a conventional loan you will more than likely pay some form of mortgage insurance.
Mortgage insurance protects the lender in case you default or lose your home. It’s designed to offset the foreclosure costs should something happen. History shows that people investing less than 20% in a home purchase may default at a higher rate.
Mortgage insurance can be removed from some loan types and other loan types can be paid upfront, added to the loan amount or stays for the life of that loan. The amount you pay every month varies depending on the loan and/or your credit and financial situation.
Your loan originator will discuss how this affects your monthly payment for your home loan.

An impound account allows you, the homeowner, to make one payment every month including taxes and insurance for the property. The lender has an account setup to collect from you monthly and pay out as taxes and insurance is due relieving you from the headache of having to come up with large sums of money throughout the year.
The impound account is considered a pre paid item at the closing table and likely is communicated to you as included in your closing costs.