Frequently Asked Questions
What Information to I need to apply for a loan?
- W2's and 1040's for the past 2 years
- All pay stubs from the past 30 days
- Residence addresses from the past 2 years
- Names and addresses of employers form the past 2 years
- Last 2 months of bank statements with all pages
- Homeowners insurance agent name and contact info
What information do I need to refinance a home?
All of the above 6 listed items plus a copy of your current mortgage statement
What should I avoid doing when applying for a home loan?
- Don NOT buy or lease an auto. This will affect your debt to income ratio. A very important factor.
- Do NOT move assets from one bank account to another. These show up as new accounts and complicate the paperwork.
- Do NOT change jobs. Income from a new job cannot be considered as income until your probation period is over.
- Do NOT buy new furniture or major appliances. New debt may disqualify you from a loan.
- Do NOT run a credit report on yourself. It will show on your credit report.
- Do NOT attempt to consolidate bills
- Do NOT pack information needed for the application. Duplicate copies take weeks to obtain.
If you follow these simple steps until your are in your new home and settled, you are much more likely to receive a loan.
What bank should I go to and apply for a home loan?
Start with your local bank that your are currently banking with.
What do I need to apply for a home loan?
Last 3 payroll stubs Last 2 years income tax
Does Apply for a loan affect my credit?
Yes, each time you apply for a loan it drops your credit score.
Why should I be pre-approved for a home loan?
To Establish your price range for your new homeGives you the ability to purchase when your find your new home you will be able to expedite the purchase of your new home.
Does applying for a loan affect my credit?
Yes, each time you apply for a loan it drops your credit score, talk this over with the loan officer.
What is a Short Sale?
Sometimes home owners attempt to sell their home before I goes into foreclosure or before they give it back by the deed-in-lieu process. Often a home owner’s house value falls below the amount owed on the mortgage. Most home buyers will not purchase a home for more than its value simply because the seller’s mortgage balance exceeds the home’s market value. Many mortgage lenders authorize a short sale of a home, which allow the seller to sell the home for less than the full amount owed on the mortgage. Usually the seller may not receive any funds from the sale of the home, but is allowed to save his credit from the effects of a foreclosure.
What is a HUD Home?
The US Department of Housing and Urban Development or HUD, sells homes owned by the government or by a government agency. These can be foreclosed homes, which the, FHA, VA or USDA insured or guaranteed. They can also be homes given back through a deed-in-lieu process. These homes can also come from homes seized by law enforcement agencies, IRS or the US Army Corp of Engineers.
What is a Foreclosure Home?
The foreclosure is when a bank or mortgage lender forcibly, through the courts, takes possession of a home because the borrower did not pay the required payments. The foreclosure process can take months, sometimes a year or more to complete. This whole process requires attorneys, real estate agents, and marketing people. Most lenders would rather find a way for the home owner to keep the home and make the payments instead of taking the home and trying to sell it.
What is Deed-In-Lieu?
Occasionally lenders receive homes when the home owner voluntarily gives the home to the lender. This is called the deed-in-lieu of foreclosure. Some lenders provide incentives to home owners who cannot make their mortgage payments to give their home back, instead of forcing the mortgage company to spend the money on a foreclosure process. They may provide relocation assistance to the home owner or even allow them to stay in the home and rent it back from the mortgage company for up to a year. If the mortgage company receives the home back without foreclosing, it lowers the overall expense for the home and may lower the purchase price when the lender sells.
What are Comps?
To determine the value of a house, an appraiser or an agent will look at three comparable sales, or comps. Agents and appraisers have access to the MLS, which is a database of all the properties in a given area that have been listed for sale, are in the process of being sold (called pending), or have already sold. Without being an agent or an appraiser, you may have a harder time accessing this information. The properties that have been sold already are the key. To determine your house value, you need to find homes that are similar in size, condition, and location. The theory behind value is that your home is worth whatever others would be willing to pay for it. The best way to determine how much people are willing to pay is by discovering how much they have paid for similar homes. Every home is different, with features that make the home more or less desirable. For example, a three bedroom house is probably worth more than a similar home in the neighborhood with only two bedrooms, just as a two car garage is worth more than a one car garage. To determine a house’s value, you will look at three similar properties that have sold within the previous six months that are similar, and then compensate for the differences. Does one home have central air and your home does not? Find out what central air costs and subtract from your home. Does one on the comps have 100 square feet less? Find the cost per square foot average in your area and increase your home’s value by that much.