Month: August 2021

There are several home-buying myths that have often dissuaded potential home buyers from looking for homes. Being aware of these myths will make you more confident in your ability to purchase a home.

1. You can get a loan with less than 20% down. FHA, VA, USDA and other government-sponsored programs will originate loans with as little as zero down. You can also receive gifted funds from relatives or friends to increase the amount of your down payment to help you qualify.

2. Having a low credit score doesn’t necessarily disqualify you from getting a loan. Increasing your down payment to 10% with a credit score as low as 500 may allow you to get an FHA loan. The larger the down payment, the less risky your loan will be for lenders. A cosigner will also reduce how risky the lender perceives you if your credit score is low. Be sure to check your credit report for any correctable errors that may be influencing your score.

3. You don’t get your loan just because you have been preapproved. Once you get an accepted offer, followed by an appraisal and more documents to your lender, you still won’t have the loan. The loan is yours when underwriting gives the final approval, you sign the loan documents and the sale closes.

4. It’s not all about the interest rate. Compare different rates with the loan terms and up-front fees. Big up-front fees may cost you more than the difference in interest between loans. The annual percentage rate (APR) will be the determining factor in what loan may be best.

You can be assured that your best interests will be first and foremost when it’s time to begin the loan process. Call or email us, and we will put together a loan program with the interest rate and terms that work best for you.

The first step to home buying is to connect with a lender and get preapproved for a loan. It is a time-consuming and challenging process due to the amount of documentation that we will require to get you preapproved.

Your diligence in providing us what we will need will pay off when it comes time to submit a purchase offer. Real estate agents always encourage including a mortgage preapproval letter to add strength to the offer. Once you have an accepted offer on a home, satisfying your loan contingency will then be much easier.

For most conventional and FHA loans, here are several of the documents that you will need to submit for a preapproval: a state or federally issued ID, proof of income in the form of pay stubs or W-2s, your two most recent federal tax returns, the last two statements for bank and investment accounts, any settlement statement of a recent home sale, a gift letter for any down payment assistance, any marriage settlement agreements and a letter of explanation for any questionable items on your credit history.

For self-employed home buyers, we will also request two years of 1099s and company tax returns, two months of profit-and-loss statements, a balance sheet and your current business license.

As your lender, our goal is to keep the mortgage preapproval process as streamlined as possible. We can guide you in the document-gathering process to make sure you have what you need. Call or email us today. We are always here and ready to help.