1. How much are closing costs? And how much money do I need?

Closing costs are approximately 5-6% of the sales price, depending on the sales price and taxes. There are programs that you may only need approx. $1000 of your own funds.

2. What is the minimum FICO/credit score that I must have?

The norm is 580, but if you have a lower score, you may get approved with 10% down.

3. I am not a 1st time buyer, can I still get an FHA loan?

FHA stands for Federal Housing Administration. You do not need to be a 1st time buyer.

4. Must I be at my same job for 2 years?

No, you do not have to. A mortgage company will look for a 2 year work history. If you switched line of work or have been out of work for at least 6 months, you may need to be at your present job for 6 months.

5. What is the difference between a Pre-Qualification and a Pre-Approval?

Pre-qualification is based off of information given verbally or in email, but not verified. Pre-approval is where your credit is pulled and income documentation (paystubs, w-2s and/or tax returns) has been viewed by the mortgage loan officer.

6. Can I buy a house that needs repairs? And can I finance the fix up costs?

Yes, there are renovation loans available that also cover fix up costs. One is with FHA and one is with Conventional financing.

7. What paperwork will I need?

Here is what you’ll need to get started:

  1. Full name, Social Security number, address, phone number, and email address
  2. Employer name, address, and phone number
  3. Copies of pay stubs that show your most recent 30 days of income
  4. W-2 and annual income before taxes; if self-employed, a copy of most recent quarterly or year-to-date profit/loss statement
  5. Signed personal and business tax returns from the past two years (all pages and relevant schedules required)
  6. Expenses, including housing, credit card and other loan payments; if you are currently renting, your address, monthly rent, and name and address of landlord
  7. Two most recent bank statements for all financial accounts, including investments
  8. Most recent monthly statement for any mortgage, home equity loan or line of credit you hold on your home (for refinance transactions only)
  9. The address and sale price of the property being purchased and a copy of the signed Purchase and Sale Agreement (for purchase tranactions only, if an offer has been made)
8. What is PMI?

Private Mortgage Insurance. It is required if you are doing a Conventional loan with less than 20% down. There are other options to not have monthly mortgage insurance if you put less than 20% down, it will depend on your credit score. FHA and USDA has similar monthly mortgage insurance, but is required monthly.

9. What are Points?

An interest rate can be with 0 points and usually up to 3 pts. The lower the interest rate, the more points you may pay. 1 point = 1% of your loan amount. For example, if your loan amount is $150,000, 1pt = $1500, 2 pts = $3000, 3 pts = $4500.

10. When can I lock my rate?

It is normal for you to be able to lock in your interest rate once you and the seller have signed an agreement of sale. You can lock in your interest rate for 30, 45 or 60 days. There are some longer lock options if needed.

What is a home appraisal?

A home appraisal is a professional evaluation of the value of a property. It’s typically conducted by a licensed, certified professional. The appraiser is an unbiased individual with the necessary knowledge and experience to determine the fair current value of a home.

Who pays for a home appraisal?

A home appraisal that’s conducted as part of the home buying process is typically paid for by the buyer. The lender chooses the appraiser, and the buyer pays for the service as part of the closing costs.

What does the home appraisal determine?

The home appraisal is an important step in the home buying process because it lets the lender know that the loan you’re seeking is appropriately valued for the home in question. If the appraiser determines that the home’s value is less than the agreed-upon price, you may not be able to get a loan for that sum. Lenders require an appraisal so they know they’re making a wise financial investment by providing you with a home loan.

What does the appraiser look at?

An appraiser will look at the location of the property, its overall condition, and its amenities. The appraiser may walk through the home to look for obvious health and safety code violations. The appraiser will also assess the values of comparable homes in the area. The selling price of similar properties within the last six months will determine a great deal about how your home is valued.

Is an appraisal the same as a home inspection?

No, an appraisal and a home inspection are different. An inspection is a more detailed evaluation of the home, which includes a close look at plumbing, HVAC systems, and more.