Ask The Loan Officer

A mortgage is essentially a secured loan that is used to buy a home. The home is used as the collateral. Under the agreement between you and the lender, the lender has the right to seize your home if you don’t repay the money you’ve borrowed.

The entire mortgage process — from pre-approval to getting the actual loan — can take between 30-45 days to complete. The mortgage process has several parts, and also has several third-party vendors that they must rely on to return items needed (appraisal, verifications, etc…) The process can be slowed even further if the lender uncovers any financial issues during its review.

The amount of your down payment will depend on the type of loan you choose and the lender’s specific requirements. In general, conventional mortgages will require a down payment. Borrowers who choose a conventional loan and are unable to make a down payment of at least 20% of the home’s purchase price may be required to purchase private mortgage insurance (more on that soon).

If you’re unable to save a 20% down payment, you may want to look into home loans options that are government backed. These programs are more lenient and may require a smaller down payment.

Pre-approvals are authorized mortgage decisions that tell a home buyer how much home they’re permitted to purchase and for which mortgage rates and programs the buyers qualify.

Pre-approvals use verified credit scores, income and asset information, and employment history. They’re a reliable, accurate tool to help you buy your home.

By contrast, pre-qualifications estimate how much home you can buy based on self-assessment and self-reporting.

Debt to Income ratio:

The 43% DTI ratio rule may be a good measure our definition of affordability, but may not match your monthly budget needs. When you’re pre-qualified we don’t consider:

• How much your electricity, water or gas bills are

• How much you pay for car insurance

• What your monthly grocery bill looks like

• Soccer camp, ballet lessons, tutoring costs or other extra expenses

• Savings plans for retirement

• Future medical bills, like braces or an unexpected injury

Closing costs can include things like appraisal fees, attorney fees, title insurance fees, documentation fees, and pre-paid taxes and insurance. Closing costs can add up to several thousand dollars to the loan amount.

If you have extra cash in the bank or the seller is offering to pay some of your closing costs, you may want to buy mortgage points to get a lower rate. One point equals 1% or your loan amount, and can be used to “buy down” your interest rate.

If you are purchasing a home, it makes sense to use a real estate agent. A buyer’s agent is legally bound to help the homebuyer in a real estate transaction. A realtor with a fiduciary duty to help the home seller is known as a listing agent.

Buyer’s agents assist in the home buying process in a number of ways, from finding the right property to negotiating the offer to putting you in contact with other professionals, such as real estate attorneys, home inspectors, and even movers.

A buyer’s agent will help you navigate your way to homeownership.

It is important to find an agent who you can connect with and who understands what you are looking for. If you need help finding a local real estate agent, just let me know, I work with the best ones in the area.

Most real estate agents earn money on the real estate deal instead of an hourly rate. This is usually a percentage of the sales price of the home. If you’re buying a home, you typically don’t have to pay real estate agent commission. Generally, the seller pays the full commission for both the services of their listing agent and the buyer’s agent.

The difference between a mortgage broker, a mortgage lender, and a bank is where their money comes from and which government group licenses them to lend. Customer service levels, interest rates, and closing costs are mostly the same – although mortgage lenders tend to move more quickly.

There are a lot of mortgages that work great for first-time home buyers. Some mortgages let buyers make small down payments or no down payment on a home. Other mortgages allow buyers to get approved with lower credit scores.

When choosing the best home loans for first-time buyers:

• For buyers in rural areas/zones: USDA Mortgage

• For buyers with military experience: VA Mortgage

• For buyers with excellent credit: Conventional Mortgage

• For buyers with average credit: FHA/Conventional Mortgage

• For buyers with below-average credit: FHA Mortgage

• For buyers with more than 4 mortgage properties: Conventional Mortgage

• For buyers of condominiums: Conventional Mortgage

The closing process, or settlement, is the final step in buying a home. Closing is when you and all other parties in the mortgage loan transaction — real estate agents, attorneys, your title insurance company — sign the necessary documents to close the deal. At that time, you become legally responsible for the mortgage loan. For this reason, it’s important to carefully read and understand your loan documents. Make sure the loan agreement outlines the terms and conditions you agreed upon, and don’t sign any documents that contain errors or that you don’t understand.

This initial consultation covers:

• How long you plan on living in the home

• How much down payment you will need

• How much you want your monthly payments to be

• Simplifies the home-buying process from the start

• Helps you determine how much home you can afford before you start shopping for homes

• Lets sellers know you're serious about purchasing a home

After you have completed a loan application, your loan file is submitted to the loan processor.

• The processor reviews your file and orders your property appraisal.

• Depending on your situation, the processor may need additional documentation during

this step.

• Once your loan file is completed, the processor submits it to underwriting for approval.

• The underwriter reviews your loan file to ensure all guidelines are met for the specific loan

program and issues a loan decision.

• Once your mortgage has been approved and all conditions have been cleared, your loan is

moved to "Clear to Close" status.

You will receive a loan commitment letter that contains details of your loan, including:

• Rate, amount and term

• Outstanding conditions that need to be addressed before the file is sent to closing

Once everything is cleared by the underwriter, our closing department will complete your

final documents

During closing, you will sign a variety of final documents. Be sure to bring:

• Photo ID

• Proper form of payment to cover down payment, closing costs, prepaid interest, taxes,

insurance or any additional costs