Home Buyer FAQ’s 2018-08-19T23:23:53+00:00

Home Purchase Frequently Asked Questions

General/Intro Questions

The first way to get started is to give us a call or email us. Even if you do not know if you qualify or if you are not an expert at mortgages, we can help guide you and answer any questions you may have with no strings attached. We believe in spreading information freely as it benefits the society and us as a whole so we always try our best to help our callers even if they choose not to do business with us. There is never any pressure.

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We believe in working around the clock for our clients. We understand that people can be very busy with their personal or work life and they may not be able to focus on their mortgage during their waking hours. That is why we decided to be available whenever you are. If you need help at 11 pm on a sunday night, just let us know in advance and we can be there for you to help.

Our hours are listed as 8 AM-11PM 7 days a week but if you only have free time before or after these hours, let us know and we will be there for you!

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Our main office is in Suwanee, Georgia. We have the capability of having remote closings at a location that works better for you. Let us know where you want to close your loan and we will try to make it happen. We are currently expanding to Florida as well, in the Orlando suburbs.

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A pre-qualification is when you provide us with some of your basic information and we determine your eligibility for a loan. A pre-qualification is mostly speculative as it is dependent on the information you have provided. We look at your stated income, assets, and liabilities. We then determine if you would qualify for a loan and if so, how much of a loan you could get. This is the first step in determining your eligibility. We then make a letter for you with your pre-qualification terms. The next step would be to get a pre-approval letter which goes more into depth and provides more confidence.

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A pre-approval is when we take a detailed look at your documentation to determine your eligibility for a loan. At this stage, your loan has usually been approved by an automated underwriting system and we have verified all your documentation. We will then provide you with a pre-approval letter which you can give to your realtor or keep it as you search for a home. Providing a pre-approval letter with your offer will improve the strength of your offer and make a seller more likely to choose your offer over others.

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A pre-qualification is based on stated verbal information that you have given us. A pre-approval is different in that it is supported by verified documentation and it has more certainty. A pre-approval is more valuable and gives you and your realtor more certainty as you look for your home. It is also more difficult to obtain as you have to supply your documentation and complete a loan application. Furthermore, we have to pull a credit report whereas, on a pre-qualification, we don’t necessarily have to.

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At the very start of the process, we generally do not unless it is specifically requested. If you would like to do a pre-approval with us, then we will pull your credit to verify your scores for the pre-approval letter. If you only want to pre-qualify, we can help you find a general idea of what your credit score is through free online sources such as CreditKarma. This type of information does not impact your credit score and we can get a general idea of what your credit score is without formally pulling it. This is a good idea if you are not exactly ready to buy a home just yet but you wish to prepare yourself for when you are ready. If you do not want us to pull your credit, just let us know and we will delay that until a later time.

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A loan application is a simple questionnaire that provides us with some background information about financial history. It is short and simple to complete and it allows us to have a better idea of what we are dealing with. It comes with no obligations, can be done at no cost, and we do NOT pull your credit just because you submitted an application. We recommend that all of our clients complete a loan application at the start. You do not need any formal documentation to complete a loan application.

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There is absolutely no cost to apply for a loan with us. The only time that you will be requested to pay any money is when you are ready to order an appraisal.

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Absolutely! We can help you reach a point where you are qualified in the future. We can take a look at your credit and see where it can be improved. We can also provide suggestions on how to become qualified in the future. All of this is done at no cost to you.

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This mainly depends on who you work with for your mortgage. The industry standard is about 30 days. Banks sometimes are known to take longer due to additional overlays and restrictions.

If you provide us with the documentation immediately, we can usually have your loan approved within 48 to 72 hours. From there, we just have to wait on the appraisal to come in and any additional conditions to be satisfied. On average, from start to finish, we take about 2-3 weeks. Although we prefer not to work with super short time frames, we can most certainly do so if that is what you need. In cases like that, we have had loans go from start to finish in about a week.

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Qualification Questions

The main things we look at are your income, assets, liabilities, and employment. There are other smaller things to consider about your financial situation and history, but the main qualification criteria are within these four categories. An important concept that we cover is your “Debt to Income Ratio” or “DTI” for short. Your debt to income ratio helps us determine what loan amount you would qualify for based on your income and debts.

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The debt to income ratio tells us the percentage of your debt relative to your income. It is the main qualification standard that we have to use when determining what loan amount you would qualify for.

Here is an example that shows you how to calculate the debt to income ratio:

Bob earns $1,000.00 a month. Bob currently has a car loan that is paid monthly for $100.00 per month. He also has a credit card with a minimum payment of $50 per month. Those are the only liabilities that Bob has to his name. Therefore, his debt-to-income ratio can be calculated as follows: $150 (total monthly credit obligations) divided by $1,000.00 (monthly income before taxes). This comes out to be 15%. The maximum debt-to-income ratio we allow is 50% but sometimes certain exceptions can be made depending on the situation if you cross over 50% slightly (although this is very uncommon).

Some important notes here:

  • Income is calculated as gross income before any taxes or deductions
  • All liabilities or outgoing recurrent payments must be included in the liabilities section.
  • Credit card liabilities are calculated as the minimum payment on your card. You must include all credit cards you have and add their minimum payments together.

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To find out how much of a payment you qualify for, take your income in an annual format and divide by 12 to get your monthly income. Then multiply your monthly income by 50% and subtract out any monthly liabilities. The amount you have remaining is what you can qualify for in terms of a new monthly payment.

Consider this example to help you understand this concept:

Bob makes $12,000.00 per year. Therefore, his monthly income is $1,000.00 per month. Bob has a car loan that he pays $100.00 per month for. He also has two credit cards. One has a minimum payment of $20.00 and the other has a minimum payment of $30.00.  Bob is currently renting but wants to buy a new home. He wants to find out what monthly payment he can qualify for. To do this, you would take the $1,000.00 per month and multiply by 50%. That gives us $500.00. Then, he needs to subtract his current monthly obligations from this $500.00. That would leave him with $350.00. This $350 is what you would have to qualify for a new monthly payment. On the home you want to buy, your monthly principal and interest, monthly taxes and HOA dues (if applicable) must fit within $350.00. As you can see, Bob most likely would not be able to fit all the payments in the new home within $350.00. Bob will most likely not qualify for a home at this point in time.

 

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At this point in time, we can only work with credit scores as low as 580. We are working on accepting lower scores in the future but as of now, 580 is our cutoff. We can always try to help you improve your credit if you are below the 580 mark. Give us a call and we will see if there is any way we can help.

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If you are not a veteran, we can work with a down payment as low as 3%. If you are a veteran, we can work with no down payment in certain situations.

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Yes! We allow you to use gift funds as a source for your down payment. You potentially would not have to use any of your own money as a down payment if it is all gifted.

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We can give loans to self-employed persons but the qualification standards are a little different.

If you have been in business for less than 5 years, we will need 2 years of tax returns and the earned income you made over the two years will be averaged together.

If you have been in business for more than 5 years, we will be able to accept your most recent 1-year tax return. In return, you will have to prove that you have been in business for more than 5 years. To do this, you will either need to provide a letter from your CPA stating this or you can provide information from the secretary of state that shows this.

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You must have a 2-year documentable work history before you are eligible for a loan. There are exceptions to this. If you were a student within the last 2 years, you may still be eligible for a loan. If you had a gap in employment for any period of time, we may still be able to accept your loan application as long as you have worked for at least 2 years in the past.

 

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Document requirements differ from person to person depending on your financial background. At the minimum, we will need the following documents from all applicants:

  • State Issued ID (Driver’s License, Passport, etc)
  • 2 months of your most recent bank statements (you only need to provide the accounts that have enough money to cover your down payment)
  • If you are self-employed: Most recent 2 years tax returns (or 1 year if you have been in business for more than 5 years)
  • If you are not self-employed: Last Year W2 and Last 30 days worth of paystubs from your current employer.
  • If you are purchasing your home, we will need your purchase contract
  • Green Card if Applicable
  • Work Visa if Applicable

There may be other documents we will need depending on your situation. For example, if you are a veteran, we will need your certificate of eligibility.

If you have any trouble finding your documents, let us know and we can help!

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There is no maximum age limit for any loan product. The minimum age to be on a loan is 18 years old.

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Loan Pricing and Options

We are planning to have a section on our website that allows you to view our current rates but for now, the only way would be to contact us.

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Interest rates are different for everyone and they mainly depend on your application and credit history. Higher credit scores will have better interest rates. Greater down payments and larger loan amounts will also have better interest rates.

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Interest rates change many times a day depending on market conditions. We can most certainly lock in an interest for you once you are ready to move forward with your loan.

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Interest rate lock periods are certain periods of time where your interest rate remains locked in. You have to complete your loan within this amount of time. You can choose what lock period you want when you are locking in your interest rate. The standard lock period is 30 days. We also offer 15 day, 45 day, 60 day, and 90 day lock option. It is important to note that longer lock periods come with a greater cost than shorter lock periods. In order for us to work with a 15 day lock period, your loan has to already be in an approved status.

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Points are costs added to your loan for selecting a lower interest rate. We often like to tell people that rates don’t move, only the costs associated with them move. So for any rate, there is usually a cost or a credit associated with that rate. If you want a really low interest rate, you will have to pay “points”, or prepaid financing charges up front. If you need credits to cover your closing costs, you can choose a higher rate and essentially “sell” points to the lender instead of buying them. This will provide you with a lender credit which can be used towards your closing costs so you don’t have to come out of pocket to cover closing costs.

If you chose to go with no points and no credits, you will only be required to pay the standard closing costs which are applicable to all loans.

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Closing costs are fee’s associated with obtaining and closing a loan. They are present on all loans and can differ from lender to lender. Standard closing costs usually include:

  • Appraisal Fees
  • Processing and Underwriting Fees
  • Credit Report Fees
  • Flood Insurance Fees
  • Lender’s Title Insurance Fees
  • Owner’s Title Insurance Fees (OPTIONAL)
  • Attorney Fees
  • Transfer Taxes
  • Recording Fees

Although this seems like a lot to swallow, a lot of the time these fee’s are covered by a seller providing closing cost credits or by choosing a slightly higher interest rate for a lender credit.

To find out what our fees are, give us a call so we can provide you with an estimate. These fees are not standardized so we will have to discuss with you before we can provide an accurate estimate of what the fees will be.

 

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Private mortgage insurance is a type of insurance required when you purchase a home with less than 20% down. It is included in your monthly mortgage payment and it will be removed once you reach 20% equity in your home.

You can also get a “NO-PMI” loan, but this does not come without cost. Essentially, the PMI is rolled into the cost of the loan, which means your monthly payment will be higher. This is to your disadvantage as this type of PMI is built into the loan for the life of the loan, so it cannot be removed even when you reach 20% equity.

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We over many different options. We have FHA loans, Conventional loans, Jumbo Loans, Adjustable Rate Mortgages (ARMS), and VA (Veterans Affairs) loans. We also offer custom loan terms so we can do the standard 15, 20, 30 years fixed or any term in between those amounts.

At this time, we do NOT offer reverse mortgages.

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An appraisal is a third party verification of value. An appraisal company will visit the property you are purchasing or refinancing and complete an appraisal report to provide an approximated value of the home. To do this, they compare the features of the home that they are appraising with comparable homes that have sold recently.

Appraisals are required on all purchases and refinance unless you receive an appraisal waiver from the automated underwriting system. In that case, you will not be required to purchase an appraisal but you still can if you wish to do so.

If you are required to do an appraisal, the usual cost for one is between $500 to $800 dollars, depending on which appraisal management company is being used.

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Most likely not. There are only a few circumstances where we can do this but it is very rare. Please call us to discuss this option.

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The interest rate is the quoted rate of interest you will have on your mortgage and that is what you will pay every month on top of your principal payments. If you are in a fixed rate loan, this rate will never change over the life of the loan.

An APR or annual percentage rate is not an actual interest rate and it is not used to calculate your monthly payments. Instead, it is simply a figure used to compare two loans side by side. The APR includes all additional costs associated with the loan as part of the loan amount, so it gives you an overall picture of what the total financing charges are. When comparing two loans of the same interest rate and different APR’s, the loan with the lower APR will have less closing costs associated with that loan. The loan with the higher APR will be more expensive upfront.

The APR is not the only thing you should look at. There are many components of a loan which may be of greater importance than the APR alone depending on your situation. For example, a quoted loan may have a slightly higher APR than another loan, but it also may have a significantly lower PMI rate which would save you a lot of money over time.

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