Mortgage Process
Embarking on your homeownership journey starts with understanding how much you can borrow. Before diving into the housing market, it’s crucial to know what you can afford. By answering a few straightforward questions, we’ll calculate your buying power using standard lender guidelines.
Ready to skip the bank hassle? Let’s talk in 10 minutes. Click here to Pre-Qualify.
Pre-approval is highly recommended as it verifies your income, credit, assets, and liabilities. This ensures you:
- Focus on properties within your budget: No more falling in love with homes that are out of reach.
- Negotiate with confidence: Sellers will see you as a serious buyer.
- Close your loan faster: Streamline the process and move into your new home sooner.
Dive Deeper: Understanding Key Concepts
LTV and Debt-to-Income Ratios
LTV, or Loan-To-Value ratio, represents the maximum amount a lender is willing to finance for your purchase. Creditworthy borrowers often qualify for higher percentages, even up to 100%. Another critical factor is your debt-to-income ratio—your monthly debt payments compared to your gross monthly income. Ideally, your mortgage payments shouldn’t exceed one-third of your gross income. If your debt-to-income ratio is high, you may need to make a larger down payment to qualify for a lower LTV ratio.
FICO™ Credit Score
Your FICO™ Credit Score is a vital tool lenders use to assess your creditworthiness. It’s based on factors like payment history, total borrowing, credit history length, and types of credit. Every time a lender checks your credit report, it can impact your score. So, authorize credit checks only after choosing a lender.
Self-Employed Borrowers
Self-employed individuals sometimes face more hurdles when borrowing. Conventional lenders require verifiable income records, which can be challenging for self-employed applicants. Instead, they rely on income tax returns, usually requiring two years’ worth. We understand these challenges and are here to help navigate them.
Source of Down Payment
Lenders expect borrowers to have enough cash for the down payment and other fees. Typically, this comes from savings. If you don’t have the required funds, you might receive “gift funds” from an acceptable donor, provided they sign a letter stating the gifted funds don’t need repayment.
Home loans come in various forms. Deciding which loan suits your financial situation and goals means understanding the benefits of each. Whether you’re buying a home or refinancing, there are two basic types of home loans:
Fixed Rate Mortgage
- Terms lasting 15 or 30 years with consistent interest rates and monthly payments.
- Ideal if you plan to live in the home more than 7 years, prefer stability, and want to avoid future payment increases.
Adjustable Rate Mortgage (ARM)
- Terms lasting 15 or 30 years, but the interest rate may fluctuate, affecting monthly payments.
- Suitable if you plan to stay less than 5 years, are comfortable with periodic payment changes, and anticipate future income growth.
By carefully considering these factors and seeking our professional advice, you should find the perfect loan matching your present condition and future financial goals.
Although lenders conform to government standards, approval guidelines vary depending on the loan terms. Approval is based on your ability and willingness to repay the loan and the property’s value.
Once your application is received, we start the loan approval process immediately. Your loan processor will verify all information. If discrepancies arise, either the processor or your loan officer will troubleshoot. This includes:
- Income/Employment Check: Is your income sufficient to cover monthly payments?
- Credit Check: What is your ability to repay debts when due?
- Asset Evaluation: Do you have funds for the down payment and closing costs?
- Property Appraisal: Is there sufficient value in the property?
To improve your chances of approval:
- Fill out your loan application completely.
- Respond promptly to documentation requests.
- Avoid moving money without a paper trail.
- Refrain from major purchases until your loan is closed.
- Stay local around your loan’s closing date.
Although lenders conform to government standards, approval guidelines vary depending on the loan terms. Approval is based on your ability and willingness to repay the loan and the property’s value.
Once your application is received, we start the loan approval process immediately. Your loan processor will verify all information. If discrepancies arise, either the processor or your loan officer will troubleshoot. This includes:
- Income/Employment Check: Is your income sufficient to cover monthly payments?
- Credit Check: What is your ability to repay debts when due?
- Asset Evaluation: Do you have funds for the down payment and closing costs?
- Property Appraisal: Is there sufficient value in the property?
To improve your chances of approval:
- Fill out your loan application completely.
- Respond promptly to documentation requests.
- Avoid moving money without a paper trail.
- Refrain from major purchases until your loan is closed.
- Stay local around your loan’s closing date.