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Frequently Asked Questions (FAQ)

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What is the Difference Between a Pre-Qualification and 

Pre-Approval?

PRE-QUALIFICATION

When a potential buyer is interested in possibly purchasing a property, he/she may first attempt to pre-qualify with their lending institution. There are several reason for doing this. Through pre-qualification the lender and buyer can determine which type of loan is proper for the buyer and even start to make basic financial and rate determinations.


PRE-APPROVAL

Only when a property has been chosen can the pre-approval process start. At that point the lender will apply all information gathered during the pre-qualification to attempt to determine if the buyer is a good candidate in association to the property they selected. 

What Mortgage Products are Available for the Typical Borrower?

CONVENTIONAL

The conventional mortgage is the standard mortgage option for seasoned buyers with good credit and are able to put down a sizable down payment. By obtaining a mortgage through conventional mortgage, no mortgage insurance is required.


FEDERAL HOUSING ADMINISTRATION (FHA)

Federal Housing Administration mortgages are common among new homeowners and buyer whom do not want to put down a sizable down payments. The lending requirements are less strict therefore making property ownership available to those with less money and lower credit scores.


VETERAN ADMINISTRATION (VA)

Veteran Administration loans are available to military servicemen and veterans. This type of mortgage allows the borrower to take advantage of loan rate reductions and financing exceptions.

USDA

A USDA home loan is a zero down payment mortgage for eligible rural and suburban homebuyers. USDA loans are issued through the USDA loan program, also known as the USDA Rural Development Guaranteed Housing Loan Program, by the United States Department of Agriculture.


REVERSE MORTGAGE (HECM)

Reverse mortgages are loans designed to assist seniors with equity in their existing homes obtain cash payments from the lender. This option is only for homeowners age 62 or older and is required to stay current on all property taxes and home association dues. There are no restrictions on how the funds to be used and the borrower is not required to repay any amount unless the home is sold or vacated. 

When is it Proper to Consider a Reverse Mortgage?

A reverse mortgages could be an option if the buyer is 62 or older and is looking for options to utilize the equity in their existing property. The lender will pay the homeowner monthly payments based of the home equity established. If the homeowner is intending to remain on the property the borrower, no payments are required as long as all property taxes and home owner association are current. 

Generally, What Documents are Required to Apply for a Loan?

When applying a for any type of mortgage option the lender could cask for the following documentation:

  • W2
  • Two (2) year 1040 tax returns (if required)
  • Driver License
  • Bank Statement
  • Credit Report
  • Asset List
  • Addition Income Information
  • Current Employment Information

Additional documentation likely be require depending on the which type of loan the borrower is applying for. 

What are Mortgage Points?

ORIGINATION POINTS

Origination points are used to or estimate compensate for the loan officers. The mortgage origination points typically equal 1% of the total mortgage amount.


DISCOUNT POINTS

Each mortgage discount point typically lowers the interest applied to the loan by .25%. Generally lenders will allow buyers to prepay their interest up to three discount points.

How Long does the Typical Mortgage Process Take?

The typical mortgage process can take anywhere between 30 - 60 days to review and processed. Through preliminary actions like pre-qualification, that timeframe can be reduced down. If clear conditions are needed to be met, the process could be stalled until the conditions are resolved.

How Much is Typically Needed for a Down Payment?

Determining what is needed financially greatly depends on the type of mortgage being applied for. Through the process of pre-qualification the lender will work with the potential buyer to determine what type of application is proper for the borrowers needs.

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