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Can I get pre-qualified or pre-approved for
a home purchase loan before I’ve found my property?
Absolutely. However, you should not confuse a pre-approval with
a pre-qualification. During the pre-qualification process, our Mortgage
Consultant will ask you a few questions and hand you a pre-qualification
letter. The pre-approval process is much more complete.
During a pre-approval, our Mortgage Consultant does all the work of a
full-approval, except for appraisal and title search. When you are
pre-approved, you become like a CASH BUYER and have more negotiating leverage
with the seller. In some cases (especially in multiple-offer situations),
having a pre-approval can make the difference between buying a home and
not buying a home. In other instances, home buyers have been able
to save thousands of dollars as a result of being in a better negotiating
situation.
Most good Realtors will not show you homes before being pre-approved
because they do not want to waste your time, the seller’s time, and
their time. First Banc Mortgage will pre-approve you
at minimal or no cost. We will typically need to check your credit
and verify your income and assets.
Once your loan has been approved you can change any of these variables
to match the specifics of your purchase transaction. Please note
that we cannot lock in a loan until a property address has been specified. top
Can I make changes to my application?
Yes, you can make changes anytime before you lock in your rate.
Keep in mind that any changes you make may extend the time that it takes
to close your loan, may increase the cost of closing and may effect your
interest rate. We recommend that you complete your original loan
application accurately and completely prior to submitting. Once
you receive confirmation of your rate lock, you should review the terms
carefully and contact your mortgage consultant immediately if any corrections
are needed. top
Do I have to finish filling out my application
at one time?
No. First Banc Mortgage gives you the convenience of changing
or finishing your application at any time before final submission to lender.
Simply call 1.877.370.2262 or e-mail your Mortgage Consultant to
have confidential changes made to your existing application. top
How do I increase and protect my credit rating?
Here are a few general tips to assist you in raising and maintaining
your credit score:
- Maintain two to three revolving charge accounts (such as Visa or MasterCard)
in good standing.
- Have a couple of other credit card accounts, such as department stores
or gas cards, in good standing.
- Avoid “finance” company credit card offers.
- Avoid credit inquiries-they lower your credit score.
- Don’t max out your credit cards-the ratio of available credit
to your total credit balances is very important.
- Don’t apply for multiple credit lines; this triggers an inquiry
of your credit, which lowers your credit score.
- Never co-sign a loan for someone else top
How long will it be before we will know if the
loan is approved or not?
If your application is received online, we can give you a preliminary
pre-approval within 8 business hours. In other instances between
24-48 hours from the time we receive your application. However,
this is dependent on your credit scores and overall file. In some
cases it could take a little longer, such as 5-8 business days. top
How long will it take to close the loan
If everything goes smoothly, we should be able to close in as little
as 10 days. top
How will my credit score affect my loan application?
Credit scoring plays a significant role when you apply for a loan. Higher
credit scores help you to be eligible for more loan options. If you've
had credit difficulties in the past, there are still mortgage programs
available, but they will usually cost more and will vary depending on
the severity of your credit problems. top
Should I refinance?
The significant and most common reason for refinancing is to save you
money. You can save a lot of money every month by lowering the interest
rate on your current loan. How much you can save depends on a lot
of factors. You have to consider how much it will cost in fees in
order to realize the savings in your payment. Saving money
through refinancing can be achieved by obtaining a lower interest rate,
which causes your monthly mortgage payment to be reduced or by reducing
the term of the loan, which saves money over the life of the loan.
Even if the fees get added on to the loan balance, they're still there.
A good option for a lot of people is to get a loan with no points or fees.
But those loans come with higher interest rates.
You may also consider refinancing in order to convert your adjustable
loan to a fixed loan. The main reason for this is to obtain stability
and security offered by a fixed loan rate over the term of the loan.
Adjustable rates are popular when rates are higher whereas when rates
are low most people tend to lock in for a fixed loan rate.
If your intentions are to consolidate debts and replace high interest
loans with one low rate mortgage than you may want to consider refinancing.
The loans being consolidated may include second mortgages, credit lines,
student loans, credit cards, consumer charge cards, or other debt you
may have. In many cases, debt consolidation saves you money by saving
on taxes and avoiding paying high interest rates. Mortgage loan
interest is tax deductible whereas interest on consumer loans is not tax
deductible. top
What are points?
An amount equal to 1% of the principal amount of a mortgage loan.
Discount points are a one-time charge assessed at closing by lender to
increase the yield on the mortgage loan to a competitive position with
other types of investments. For instance, one percent of a $100,000
loan is equal to $1,000. top
What does it mean to “lock a rate”?
“Rate locks” are a way of protecting from a possible rise in
interest rates during the processing of your loan. With some lenders,
you can lock a rate up to 90 days. Generally speaking, if you choose
to lock for an extended period of time, the cost of the loan goes up.
Furthermore, if rates improve during the processing of your loan, you
will still get the rate you locked. Some lenders may require a home purchase
contract before they will allow you to lock an interest rate. top
What if I have little or no credit?
Use your good payment history on rent and utilities, as well as credit
obtained through family members or friends. Provide a year’s
worth of canceled checks to validate consistent monthly payments.
This information will become part of your application for the mortgage
loan. top
What if I have a credit problem because of an
unusual situation?
If you normally pay your bills on time but failed to pay because unusual
or temporary situation, write a detailed letter explaining your circumstances.
Also provide supporting documentation with your letter such as a doctor’s
letter that will add credence to your case. The information will
become part of your loan application. Your lender will be able to
overlook a credit problem if you can provide a good reason for neglecting
your obligation. top
What is Annual Percentage Rate (APR)?
The total finance charges for a loan that is expressed as a percentage.
APR takes into account the total cost of a mortgage, including interest,
closing fees, lender points, and other charges over the life of a loan. top
What is a Conventional Loan?
A mortgage or deed of trust that is not insured or guaranteed under a
government insured program. top
What is a Convertible ARM?
The Convertible ARM has traits similar to the ARM loan, but offers an
option for the borrower to change the mortgage to a fixed-rate loan during
an early interest rate adjustment period. top
What is a Balloon Loan?
A note calling for periodic payments which are insufficient to fully
amortize the face amount of the note prior to maturity, so that a principal
sum known as a “balloon” is due at maturity. top
What is a Buydown Loan?
A mortgage with a starting interest rate below the interest rate stated
on the Promissory Note. The lender lowers the starting rate in return
for an interest rate subsidy paid by the seller, buyer, builder, or lender. top
What is a FHA Loan?
The Federal Housing Administration provides mortgage insurance for residential
mortgages and sets underwriting standards. The loan is partially
guaranteed by the Department of Housing and Urban Development and a private
lender. top
What is a FICO score?
A FICO score is a credit score developed by Fair Isaac & Company.
It is a credit scoring method to determine the likelihood of credit users
paying their bills. Since the 1950s, Fair Issac & Co were pioneers
in setting credit scoring standards and even today their method has become
the most widely accepted and reliable scoring method used by lenders in
credit evaluation.
A credit score attempts to condense your credit history into a single
number. Credit scores analyze your credit history by considering
numerous factors such as:
- Late payments
- The amount of time credit has been established
- The amount of credit used versus the amount of credit available
- Length of time at present residence
- Employment history
- Negative credit information such as bankruptcies, charge-offs, collections,
liens, etc.
Credit scores are calculated by using scoring models and mathematical
tables that assign points for different pieces of information which best
predict future credit performance. top
What is a Good Faith Estimate?
When you file your application for a loan, the lender must, under the
terms of RESPA, provide you with a Good Faith Estimate of settlement services
that will likely incur. The estimate may be stated as either a dollar
amount or a range for each charge. top
What is an Adjustable Rate Mortgage (ARM) and
how does an ARM work?
An Adjustable Rate Mortgage (ARM) is a mortgage or deed of trust, which
allows the lender to adjust the interest rate periodically as agreed to
at the inception of the loan. The interest rate on an ARM is tied
to a market index and is fixed for a specific period of time. Once that
period of time is over, the interest rate is adjusted periodically (every
6 to 12 months) following the changes in the interest rate of index that
is associated with the loan. Examples of market indexes include, but are
not limited to, LIBOR, Constant Maturity Treasury, and 11th District Cost
of Funds. If you are interested in an adjustable-rate mortgage, it is
important to discuss all of the features and options of an ARM with our
Mortgage Consultant so they can help you make an assessment of the best
ARM to meet your specific needs. top
What is Hazard Insurance?
Hazard insurance is an insurance policy to protect homeowners against
property damage. This premium prepayment is for insurance protection
for you and the lender against loss due to fire, windstorm and natural
hazards. If a catastrophe does happen, hazard insurance should cover
the costs to rebuild your home. Most Lenders often require you to
get a policy before you buy or refinance a home and usually require you
to pay the first year’s premium at settlement. top
What is an Origination Fee?
A fee or charge for work involved in evaluating, preparing and submitting
a proposed mortgage loan. For FHA and VA loans this fee is limited
to 1% of the loan amount. top
What is P.I.T.I?
Principal, Interest, Taxes, and Insurance. The four components
of a monthly mortgage payment. Principal refers to the part of the
monthly payment that reduces the remaining balance of the mortgage.
Interest is the fee charged for borrowing money. Taxes and insurance
refer to the amounts that are paid into an escrow account each month for
property taxes and mortgage and hazard insurance. top
What is Prepaid Interest?
This amount represents the interest that accrues between the close of
your loan and the last day of the month in which the loan closes.
Interest on your loan after that date is included in your regular monthly
payments. top
What is Private Mortgage Insurance (PMI)?
Insurance written by a private company that protects the lender against
loss if you default on the mortgage. top
What is Title Insurance?
Insurance policy that is issued by a company regarding title to real
property. top
What is a Truth In Lending Disclosure?
The disclosure is designed to give you information about the cost of
your loan. top
What is a VA Loan?
An independent agency of the federal government that offers benefit programs
to veterans. These programs encourage mortgage lenders to offer
long-term, no down payment financing to eligible veterans by guaranteeing
the lender against any loss. top
What kind of documentation will I need to provide
the lender for verification?
As each loan has different variables, there is no single list of documents
needed for all applicants. You should be prepared to provide copies
of the following documents to your lender.
Employment & Income Data
- W-2 tax forms, past two years
- 1099's
- Pay stub showing current year-to-date earnings (two most recent stubs)
- Your job history and any explanation of a job change within the past
two years
- If self employed (defined as owning 25% of a business or more), you
need business and personal federal tax returns (two years, including
schedules), a current year-to-date profit or loss statement and a K-1
on all partnerships
Assets
- Bank account statements, past two months
- Investment account statements
- Retirement account statements
- Signed gift letter and transfer of funds verification
Liabilities
- Credit Cards - include account numbers and balances
- Auto loans and leases - account numbers and value of car
- Explanation and paperwork of any derogatory credit in the past seven
years
- Explanation letter of any derogatory credit (bankruptcy, collection,
foreclosure or default)
- Student and personal loans - include account numbers, monthly payments
and balances
- Landlord address(s) for past two years and rental amounts
Property & Realtor Information
- Name and contact information of your Realtor (business card)
- Homeowners insurance information
- Rental or lease agreements
- Residence & address for past two years top
What kind of things do I need to be aware of
as a 1st time home buyer?
Buying a home can be your largest purchase in your life. Remember
that you are in control of purchasing your home; so don’t allow anyone
to pressure you into making a purchase you are not comfortable with.
Take your time and evaluate all your options before committing to a contract
or a loan.
- Here are some tips and questions to ask yourself as you start on your
first steps to home ownership!
- Know how much you can afford first.
- Yourself, as well as the Realtor and Seller need to know if your
can obtain
financing.
- You need to know about available financing and special programs
- Is FHA right for you?
- Are you eligible for Federal VA financing?
- What about No Money Down financing?
- Are there any state sponsored programs available?
- What about Zero Down Rural Housing Programs?
- Can I borrow the down payment?
- Are Gifts allowed?
- Can the Seller pay my down payment and closing costs?
- What are closing costs?
If you require more information to these questions or need help, call
and speak to one of our Mortgage Consultants at 1-877-370-2262.
There is no cost or obligation whatsoever to you. Service makes
us different and financing is made easy. top
What loan programs are available to me as a
1st time home buyer?
Depending on your personal circumstances, you may have several different
loan programs available to you as a 1st time home buyer
First Banc Mortgage can offer you loans from No Money Down or loans
up to ONLY 3% Down. We even have programs that can finance up to
103% of your purchase price. So, call and speak to one of our mortgage
consultants at 1-877-370-BANC (2262) to find out which program is best
for you. top
When should I choose a fixed-rate loan?
A fixed-rate loan offers a borrower the comfort of knowing exactly what
their payments will be, month after month, for the life of the loan. Loan
terms can range from 15, 20, 25, and up to 30 years. In a low-rate environment,
borrowers tend to prefer a fixed-rate product that can protect them from
possible interest-rate increases. top
When should I choose an Adjustable Rate Mortgage
or ARM?
Generally speaking, an ARM enables borrowers to secure a loan at an initially
lower interest than a fixed-rate loan. This means a borrower has lower
monthly payments for a specific period of time when compared to other
loan options. Lower monthly payments may allow you to qualify for a higher
loan amount. top
What should I do if I continually struggle to
pay my bills?
The best thing to do is seek professional counseling to help you with
your credit situation. Consumer Credit Counseling Services is a nationwide
nonprofit organization that provides credit counseling free or for a reasonable
fee. They can help you develop a solid plan for regaining control of your
finances. top
What should I do to help financially prepare
for a home loan?
Here are a few tips to assist you when it comes to applying for a loan:
- Use cash instead of credit for your purchases.
- Avoid making any large credit purchases—the added debt could
impact your ability to qualify for a loan.
- Contact creditors immediately if you have a problem or concern about
your ability to make payments on time.
- Put money aside into savings so you'll have a financial cushion in
case of an emergency. top
When should I pay points on a loan?
The decision to pay points on a loan depends heavily on your circumstances.
In certain situations, it can be very advantageous for you
to pay points on your loan. Generally speaking, the longer
you plan to keep a loan the more sense it makes to pay points
to get a lower interest rate. One way to determine this is
to calculate the break-even point of how long you would have
to keep the loan in order to save over the cost of paying
points up front. If you are comparing two loans with the same
interest rate, and one of them doesn't require you to pay
points, then there is no reason to pay points. Another consideration
may be tax purposes. Points paid on a new home loan are immediately
deductible as interest. top
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