What is a pre-qualification?

 

A pre-qualification is a basic review of your finances to determine if you would qualify for a mortgage.  In general a pre-qualification is based on unverified information you provide and does not include a credit check or any documentation, and is therefore not a firm guarantee of a loan approval.

 

What is a pre-approval?

 

Unlike a pre-qualification a pre-approval can be a highly useful tool in the home buying process.  It’s essentially the same thing as apply for a mortgage, just without a specific property selected.  As part of a pre-approval a lender will check your credit, verify your assets,  income  and employment and commit to lending a certain amount of money.  A pre-approval can show sellers that you’re serious about buying a home and that you will most likely be able to close on the home.

 

Do I need great credit to get a mortgage?

 

Not necessarily, but it will certainly help.  It is possible to get a conventional mortgage with a FICO credit score as low as 620.  You can obtain a FHA mortgage with a score in the high 500’s but you will have to pay a higher cost mortgage insurance premium and for a longer period. 

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What is a FHA mortgage?

 

FHA loans are government-insured loans through the U.S. Department of Housing and Urban Development, also called HUD.  FHA loans offer an excellent start for first-time buyers with options such as a low down payment which can come as a gift from a family member.

 

How much of a down payment do I need?

 

You can get a conventional mortgage with no money down with a credit score of 702 or higher with no income limits or location restrictions.  You can get a FHA loan with a 3.5% down payment or a USDA loan with no money down with income and location restrictions.  To avoid paying private mortgage insurance on a conventional loan you’ll need to put down 20% of the purchase price.

 

What is PMI?

 

Private mortgage insurance is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults on the loan.  Private mortgage insurance is generally required for a loan with an initial loan to value (LTV) percentage above 80%.  On a conventional mortgage insurance will be automatically dropped when you reach 70% LTV.  FHA has an upfront mortgage insurance premium which is added in to the loan as well as a monthly fee.   In order to remove the mortgage insurance on a FHA loan you would have to refinance.

 

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How much should I expect to pay in closing costs?

 

The term “closing costs” refers to all of the charges you’ll need to pay before your loan is completed.  This can include credit report, appraisal, title insurance, recording, attorney/settlement agent fees, prepaid amount for property taxes and homeowner’s insurance.  Ask me about the $500 credit offer.

 

What documentation should I gather?

 

You will need to provide the following items to get pre-approved:

Income verification, the last two year’s W2’s and 1099’s along with 30 days of recent paystubs (self- employed borrower will need two years federal tax returns)

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Should I lock in my interest rate?

 

A re lock mean that you’re guaranteed today’s mortgage interest rate for some predetermined period.  Typically most lenders lock the interest rate for 30ays and may charge a fee.  Ask me about our 60 day rate lock at no cost.

 

How do I start the application process to qualify for a mortgage?

 

You can call me at 561-989-3148 during business hours or after hours at 508-868-0231.  I will take some basic information and in a few minutes will be able to give you an idea on what program would suit your needs