Frequently Asked Questions

VA and USDA loans, as well as state bond programs, may not require a down payment for the purchase of a primary residence but there are additional items to consider. To qualify for VA financing you must be a qualified veteran who has an eligible VA entitlement. You can inquire on your own at the VA eBenefits portal or your loan officer can assist you. USDA financing also offers a no down payment but there are income and property restrictions.

A gift must come from a family member (aunt, uncle, cousin, parent, sister, brother, fiancé, in-laws). There are a few required documents that you need to complete a gift, so be sure to consult your loan officer on what items you and your gift donor may be required to supply.

You cannot use borrowed funds that are unsecured such as a personal line of credit, credit cards, cash advance, etc. But if you have a vehicle, real estate, IRA or a 401k account, you may be able to borrow against them. 

We recommend contacting an experienced loan officer to learn about your finance options and see if you can get pre-approved so you know your budget before beginning your home search.

There are pros and cons to both buying and renting. It might be a less expensive monthly payment to buy your own home than rent, but you also become responsible to repair anything that goes wrong as a homeowner. Along with that responsibility comes a lot more freedom to do what you want — remodel, add on, have pets, plant a garden, and more!

Home Owner

That will depend on two things. Your lender would have to make sure that you qualify counting both mortgages in your debt-to-income ratios. Also, they would need to verify where your down payment and funds for closing are coming from on the purchase of your new home, if not coming from the proceeds on the sale of your home.

As part of the closing, the title company will divide the tax period into two parts: the time that the seller owned the house and the time that the buyer owned the house. The seller is responsible for the property taxes up to, but not including, the date the house was sold. The buyer is responsible for taxes on the sale date and afterward.

Principal and interest (P&I), taxes and insurance (if escrowing), mortgage insurance (if less than 20% down and chose a monthly Mortgage Insurance option).

If you have an ARM (Adjustable Rate Mortgage) yes, based on the terms of your Note and ARM rider, your payment may change at specific times throughout the life of your loan. Or if you have an escrow account yes, your servicer must analyze your account annually. If your taxes or homeowners insurance increase/decrease, your payment may change.

Loan Options

Yes. Sellers can pay up to 6% of the mortgage closing costs.

Yes. Occupant and non-occupant co-borrowers can co-sign.

FHA loans are insured by the government and are more “credit friendly” to help borrowers get into homes. The rates are not so credit score dependent and they have a low down payment and buyers can have higher debt to income ratios, as well as a riskier credit history. Conventional loans are privately insured and are more credit dependent on underwriting of credit history as well as for rates and mortgage insurance. They allow for no mortgage insurance at 20%+ down but they also have low down payment options as well with strong credit history. Borrowers are more limited on debt to income ratios but they have more options with these loans.

You may be able to get the home of your dreams with $0 down when using a VA loan. And sellers can pay up to 4% of your closing costs as well.

Conventional mortgages are home loans that are backed by private lenders and aren’t guaranteed or backed by any government agency.

Mortgage Process

Your interest rate is the direct charge for borrowing money. The APR, however, reflects the cost of your mortgage as a yearly rate and includes the interest rate, origination charge, discount points and other costs such as lender fees, processing costs, documentation fees, prepaid mortgage interest, and upfront and monthly mortgage insurance premium. When comparing loans across different lenders, it is best to use quoted APRs for the same type and term of loan.

For most homeowners, the monthly mortgage payments include three separate parts:

  • Principal: Repayment on the amount borrowed
  • Interest: Payment to the lender for the amount borrowed
  • Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.

A mortgage rate lock is a promise to you from the lender to hold a specific combination of an interest rate and points for an agreed upon time (typically 10, 15, 30, 45 or 60 days) until you can close on your home. Locking in a rate protects you from unforeseen interest rate increases that can occur in the days or weeks leading up to closing, but conversely, if the rates fall, you may not be able to take advantage of the lower rates.

Rate locks are dependent on the type of loan program, current interest rates, points, and the length of the lock. To hold a rate for longer periods of time, you usually have to agree to pay higher points or interest rates.

You should avoid opening new credit once you have applied for your mortgage, such as buying new car or taking out a new credit card. This can cause your approval to change since it will add to the amount of monthly debt payments that you are responsible for.

No, you are not obligated for a mortgage loan until you go to closing and you sign the mortgage and the note.

Refinance

Refinancing a home means you are obtaining a new home loan to change the interest rate, payment schedule or terms of your original mortgage. The value of the loan remains the same, unlike a cash-out refinance, in which case you apply for a new loan that is worth more than your current loan and the difference in value is yours in cash to use for things such as home improvements or paying off debt.

There are numerous reasons customers refinance the loans they already have. Some of these are:

  • To lower the monthly payment
  • To lower the interest rate
  • To switch from an adjustable rate to a fixed rate, or vice versa
  • To refinance for a higher amount in order to pay off other debts or get cash
  • To change the remaining term of the loan

Possibly. It depends on how much equity you have in your home, or how much is your home worth vs. how much do you owe in loans against your home. Getting money back at closing from a refinance is also called a cash-out refinance. 

Most lenders require that you get an appraisal or other form of home valuation before you refinance a mortgage. An appraisal assures the lender that they aren’t loaning you too much money for your property.

You may not need an appraisal to refinance your loan if you have an FHA loan, VA loan or a USDA loan. You may qualify for a Streamline refinance that cuts out the appraisal requirement in many cases.

It varies by type of refinance loan and lender. Generally, your name must be on the title of your home for a minimum of 6 months if you have a conventional mortgage or VA loan and want to do a cash-out refinance. You’ll likely need to wait 6 months to a year for a cash-out refinance after you buy a property with an FHA loan.

Qualification

Loans are looked at more favorable with two years employment at your current job. There are circumstances when less time is acceptable, such as in the case of a recent college graduate or if you have had jobs in the same industry.

You must have a 2 year history with your current employer in most cases, before commissioned income can be used. Sometimes exceptions can be made if you have had jobs in the same industry.

Any time you apply for a large loan, your lender will require a credit report. This gives them a complete picture of your finances. Buying a home is a big investment and your lender wants to make sure you are able to afford your mortgage payment.

Credit score, while certainly an important component of the mortgage approval process, is not all inclusive to your ability to qualify. The best way to find out if your credit will help you obtain a home loan is to get a pre-approval.

Yes, you can. When buying a home, you do not need to be married to purchase. Most lenders can offer a home purchase to 2 separate unmarried borrowers, and some lenders are able to offer joint credit and a joint application to purchase a home.