Question 1

How do mortgages work?

Accepted Answer

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.

Question 2

How long does it take to get a mortgage?

Accepted Answer

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.

Question 3

Can I buy a house with no money down?

Accepted Answer

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.

Question 4

What’s the difference between a pre-approval and a pre-qualification?

Accepted Answer

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.

Question 5

What is DTI?

Accepted Answer

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

Question 6

Will I have to pay closing fees?

Accepted Answer

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.

Question 7

How do mortgage points work?

Accepted Answer

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.

Question 8

Should I use a Real Estate agent?

Accepted Answer

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.

Question 9

What’s the difference between a mortgage broker, a mortgage lender, and a bank?

Accepted Answer

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.

Question 10

What’s the best loan option for me?

Accepted Answer

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

Question 11

What happens at the home closing?

Accepted Answer

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.

Question 12

Home Financing Process Step 1: Initial Consultation

Accepted Answer

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

Question 13

Home Financing Process Step 2: Pre-Approval

Accepted Answer

• 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

Question 14

Home Financing Process Step 3: Processing

Accepted Answer

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.

Question 15

Home Financing Process Step 4: Underwriting

Accepted Answer

• 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.

Question 16

Home Financing Process Step 5: Pre-Closing

Accepted Answer

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

Question 17

Home Financing Process Step 6: Closing — Congrats! You are now a homeowner!

Accepted Answer

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

Ask The Loan Officer

You have questions about the loan process and we have answers!