Frequently Asked Questions
Pre-Qualification and Pre-Approval are often used interchangeably and can both help you stand out amongst the homebuyer competition. Both require you to supply an overview of your financial history such as your income, assets, debts, and credit score. However, most people look at pre-qualification as step one and pre-approval as step two because pre-approval requires formal documentation and verification.
Some of these documents include:
- Tax returns
- Pay stubs/W-2s
- Bank statements
- Credit history
- Gift letters
- Renting history
- Work history
Although this is standard, there are also many different loan programs that can help you purchase a home with less than 5% down. For example, some Veterans can qualify for VA loans that allow them to purchase a home with 0% down and no PMI. FHA loans can also allow first time homebuyers to purchase a home with as little as 3.5% down.
Your lender will be able to assess your financial situation and determine which programs you qualify for and which ones are best for your financial goals.
A home appraisal is an estimate of the fair or true value of a home in today’s market. Throughout the home loan process your lender will order a home appraisal to ensure they determine the right loan amount for you.
Appraisals are based on a variety of factors such as the home’s current condition, the quality of the surrounding neighborhood, and a comparable market analysis – which analyzes the recent sales of similar homes in the area.
Home appraisers are highly trained professionals who are licensed by state to provide objective and unbiased appraisals.
Here is an overview of some of the most common loans:
- Fixed rate loan – a fixed rate loan provides a single interest rate for the life of the loan, typically 15 or 30 years
- Adjustable rate loan – an adjustable rate loan typically provides a lower interest rate, but for a shorter amount of time such as 5 or 10 years. After this time passes your rate usually adjusts about once a year
- FHA loan – FHA loans are insured by the Federal Housing Administration and allow some borrowers to qualify for loans with as little as 3.5% down, however they must pay mortgage insurance premiums
- VA Loan – VA loans are insured by the Department of Veterans Affairs and provide home loans for veterans with as little as 0% down and no PMI
- Jumbo Loan – Jumbo Loans are not eligible to be purchased, guaranteed or securitized by Fannie Mae or Freddie Mac, but can provide funding for amounts that exceed limits set by the government
The best first step to take in starting the home loan process is to reach out to your lender for a financial review. Once your loan officer understands your goals and your financial state, they can assist you in beginning the process.
We would love to help you better understand your options so you can make an informed decision. Give us a call at 855.849.0957 and we will schedule a free financial review!
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