Take a Look at What's Inside

What Steps Need To Be Taken To Secure A Loan?

What Is The Debt-To-Income Ratio (DTI)?

How Are Pre-Qualifying And Pre-Approval Different?

Are Any Lenders Exempt From Ability-To-Repay Rules?

What Responsibilities Do I Have During The Lending Process?

What Happens After I've Applied For My Loan?

How Do I Choose The Right Lender For Me?

How Do I Choose The Best Loan Program For Me?

What Is The Best Way To Compare Loan Terms Between Lenders?

What Costs or Fees Are Associated With Loan Origination?

What Is A Good Faith Estimate And How Does It Help Me?

What Is RESPA?

What Is An Appraisal?
Can I Remove PMI From My Loan?

 

What Steps Need To Be Taken To Secure A Loan?

You'll see some pictures in this video to help you remember later, but the first step in securing a loan is to complete a loan application. To do so, you'll need the following information. Pay stubs for the past 2-3 months. W-2 forms for the past 2 years. Information on long-term debts. Recent bank statements tax returns for the past 2 years. Proof of any other income. Address and description of the property you wish to buy. A sales contract on the home you want to buy. During the application process, the lender will order a report on your credit history and a professional appraisal of the property you want to purchase. The application process typically takes between 1-6 weeks.

 

What Is The Debt-To-Income Ratio (DTI)?

Measuring your existing debts against your existing income is one part of a lender?s required assessment of your ability to repay a loan. Like the video says: debts are existing financial commitments; a car payment is a debt a grocery bill is not. To calculate your debt-to-income ratio add up your monthly debt payments and divide them by your GROSS monthly income. (Gross income is generally the amount of money you earn BEFORE taxes and other deductions.) The Federally-established debt-to-income target is a maximum of 43% for Qualified Mortgages. If your ratio is higher there may be other loans available - however, there may also be additional questions to establish your ability to repay, and the rates may be different than those available for Qualified Mortgages. Studies suggest that a high debt-to-income ratio puts a homeowner at greater risk of challenges making monthly payments. So consider your situation and risks carefully before exceeding that suggested ratio.

 

How Are Pre-Qualifying And Pre-Approval Different?

Watch this video and it?ll make sense. Pre-qualification is an informal way to see how much you maybe able to borrow. You can be 'pre-qualified' over the phone with no paperwork by telling a lender your income, your long-term debts and how large a down payment you can afford. Without any obligation, this helps you arrive at a ballpark figure of the amount you may have available to spend on a house. Pre-approval is a lender's actual commitment to lend to you. It involves assembling financial records and going through a preliminary approval process. Pre-approval gives you a definite idea of what you can afford and shows sellers that you are serious about buying.

 

Are Any Lenders Exempt From Ability-To-Repay Rules?

This video explains that some specific kinds of lending organizations are exempt from the ability-to-repay laws enacted in 2014. These include: Community Development Financial Institutions Community Housing Development Organizations, or Downpayment Assistance Providers, and State Housing Finance Agencies In addition, small nonprofit organizations that make relatively few home loans, and loans made under Federal programs such as the Emergency Economic Stabilization Act may be exempt. The laws and guidelines are intended to help consumers and lenders avoid risk. If you want to confirm a lenders statement about being exempt from Ability-to-Repay inquire with the Consumer Financial Protection Bureau online, or by telephone.

 

What Responsibilities Do I Have During The Lending Process?

To ensure you won't fall victim to loan fraud, as you'll see in this video, be sure to follow all of these steps as you apply for a loan: Be sure to read and understand everything before you sign. Refuse to sign any blank documents. Do not buy property for someone else. Do not overstate your income. Do not overstate how long you have been employed. Do not overstate your assets. Accurately report your debts. Do not change your income tax returns for any reason. Tell the whole truth about gifts. Do not list fake co-borrowers on your loan application. Be truthful about your credit problems, past and present. Be honest about your intention to occupy the house And do not provide false supporting documents.

 

What Happens After I've Applied For My Loan?

It usually takes a lender between 1-6 weeks to complete the evaluation of your application. Like the video shows, it?s not unusual for the lender to ask for more information once the application has been submitted. The sooner you can provide the information the faster your application will be processed. Once all the information has been verified the lender will call you to let you know the outcome of your application. If the loan is approved, a closing date is set up and the lender will review the closing with you. And after closing, you'll be able to move into your new home.

 

How Do I Choose The Right Lender For Me?

There are some great tips in this video, Choose your lender carefully. Look for financial stability and a reputation for customer satisfaction. Be sure to choose a company that gives helpful advice and that makes you feel comfortable. A lender that has the authority to approve and process your loan locally is preferable since it will be easier for you to monitor the status of your application and ask questions. Plus, it's beneficial when the lender knows home values and conditions in the local area. Do your research, and ask family and friends.

 

How Do I Choose The Best Loan Program For Me?

The video puts this in more visual terms, but your personal situation will determine the best kind of loan for you. By asking yourself a few questions, you can help narrow your search among the many options available and discover which loan suits you best. Do you expect your finances to changeover the next few years? Are you planning to live in this home for a long period of time? Are you comfortable with the idea of a changing mortgage payment amount? Do you wish to be free of mortgage debt as your children approach college age or as you prepare for retirement? Lenders can help you use your answers to decide which loan best fits your needs.

 

What Is The Best Way To Compare Loan Terms Between Lenders?

Watch this video and take a few notes! First, devise a checklist for the information from each lending institution. You should include: company's name and basic information the type of mortgage minimum down payment required interest rate and points closing costs loan processing time whether prepayment is allowed Speak with companies by phone or in person. Be sure to call every lender on the list the same day as interest rates can fluctuate daily. In addition to doing your own research your real estate agent may have access to a database of lender and mortgage options or suggest a variety of different lender options.￐

 

What Costs or Fees Are Associated With Loan Origination?

Yes. As you'll see in the video, when you turn in your application you'll be required to pay a loan application fee to cover the costs of underwriting the loan. This fee pays for the home appraisal a copy of your credit report and any additional charges that may be necessary. The application fee is generally non-refundable.

 

What Is A Good Faith Estimate And How Does It Help Me?

You'll see some pictures in this video to help you remember later, but a good faith estimate lists all fees paid before closing all closing costs, and any escrow costs you will encounter when purchasing a home. The lender must supply it within three days of your application so that you can make accurate judgments when shopping for a loan.

 

What Is RESPA?

RESPA stands for the Federal Real Estate Settlement Procedures Act. This video tells you about it all. RESPA requires lenders to disclose information to potential customers throughout the mortgage process. By doing so, it protects borrowers from abuses by lending institutions. RESPA mandates that lenders fully inform borrowers about all closing costs, lender servicing and escrow account practices and business relationships between closing service providers and other parties to the transaction. For more information on RESPA, visit HUD.GOV or call 1-800-569-4287 for a local counseling referral.

 

What Is An Appraisal?

Every house is unique; appraisers are trained and licensed for expertise in putting a value on properties. Appraisers don't work for the buyer or the seller; their primary mission is actually to protect the lender who￐s risking money against the homes value. Appraisers have to weigh factors about the property and location - including size, condition and comparable properties - to appraise its current value. They know how to focus on conditions that affect value; dishes in the sink don t; damage and neglect do. Appraisals lower than the proposed purchase price can affect transaction details. The seller might have to lower the price or the buyer might have to increase down payment or fund additional escrow. Appraisal seems a lot like inspection, but they're not the same. You can think of it this way: Appraisers report on value to the lender Inspectors report on condition of the house and major components to the buyer. So - expect both appraisal & inspection in your transaction.

 

Can I Remove PMI From My Loan?

Private Mortgage Insurance can add hundreds of dollars per year to mortgage rates so it's worth learning when you are eligible to cancel - so watch this video! For loans closed after July 29, 1999 Private Mortgage Insurance - PMI - can be removed automatically, or by request. Provided your monthly payments are up-to-date your lender must terminate PMI when your principal balance reaches 78 percent of the original value of the home. OR if you reach the halfway point of the loan term such as 15 years on a 30-year loan. Consumers also have the right to request PMI cancellation when principal balance reaches 80% of original value. You can ask your lender for the date that balance will be reached. If you are current in your payments with a good history, request cancellation in writing. Follow the steps outlined by your lender and keep copies of all documents and correspondence.

 

These videos are for informational purposes only when thinking about buying or selling a house. These are not intended to supersede any information or transaction that you may be involved in with a Broker, Lender or other Real Estate Professional.