The documentation that is required to get a mortgage will vary from buyer to buyer.  For the most part however, the documentation that is required to get a mortgage will be fairly similar.

When formally applying for a mortgage, there will be some initial documentation that will be required by the mortgage lender.  Documentation such as a social security card, one months pay stubs, and the past two years w-2’s are all pretty commonly asked for by a mortgage lender.  The documentation will be different for buyers who are self employed as well.

Other common documentation that is requested by a mortgage lender to obtain a mortgage includes;

 

• Drivers license

• Bank statements

• Asset statements

• Fully executed purchase contract

• Copy of an earnest money deposit check

 

It’s important to understand when obtaining a mortgage that there will likely be additional documentation that will be required even after the formal mortgage application is completed.  Documentation that is commonly asked for after a mortgage application is completed can include;

 

• Updated pay stubs

• Updated bank statements

• Verification of employment

• Gift letter for down payment (if applicable)

 

One mistake that home buyers commonly make is not getting a pre-approval.  Many home buyers believe that a pre-qualification is the same as a pre-approval.  This is actually the furthest from the truth.

A mortgage pre-qualification can easily be defined as an estimation of how much a buyer can borrow.  In many cases a pre-qualification is only as good as the piece of paper that it’s written on.  It’s fairly common practice that a mortgage lender who pre-qualifies a buyer asks them for information such as income, debts, and other assets without verifying the information.  If a buyer is not truthful or makes a mistake when giving the information this can lead to problems in the future when the mortgage is verified by an underwriter.

A mortgage pre-approval is what every home buyer should obtain prior to looking at homes.  A mortgage pre-approval can be easily defined as a written commitment for a buyer from a mortgage lender.  To obtain a mortgage pre-approval a buyer will be required to provide the same documents that are required when formally applying for a mortgage, such as w-2’s, pay stubs, and bank statements.

There are many reasons why a mortgage pre-approval is better than a mortgage pre-qualification.  Three of the most important reasons why a pre-approval is better than a pre-qualification are;

 

• Helps buyers beat out competition in multiple offer scenario or strong sellers market

• Gives “peace of mind” to a seller when submitting offer that the mortgage will be approved

 

One of the most frequently asked questions regarding mortgages relates to deciding what type of mortgage is best.  Since there are many different types of mortgages that are available for prospective home buyers, it’s important to understand which type of mortgage is best prior to signing on the dotted line.  Below are three of the most popular mortgages that are available for home buyers wondering which type of mortgage is best.

FHA Mortgages

Federal Housing Administration mortgages, also known as FHA mortgages, are the most popular type of financing for buyers looking to purchase a home with little money down.  FHA mortgages allow a buyer to purchase a home with a minimal 3.5% down payment.  FHA mortgages also allow a buyer to receive up to 6% of a homes purchase price, frequently known as sellers concessions, that can be used towards a buyers pre-paid items and closing costs.

Another reason why FHA mortgages are a very popular type of financing is because the requirements for a borrower are fairly lenient.  It’s not uncommon for a potential borrower with a credit score of 600-620 to get approved for an FHA mortgage.

Conventional Mortgages

A conventional mortgage is a popular mortgage for prospective home buyers who have strong credit scores and who have more money available for a down payment.  One of the biggest perks to obtaining a conventional mortgage is the ability to remove mortgage insurance, which cannot be removed FHA mortgages for the entire life of the loan.

Another advantage of obtaining a conventional mortgage instead of an FHA mortgage is that a seller will traditionally see a pre-approved conventional buyer stronger than a pre-approved FHA or VA buyer.  This is mainly because the qualifying guidelines for conventional mortgages are more strict than FHA or VA guidelines.

VA Mortgages

Veteran Administration loans, also known as VA Loans, are another popular type of financing for Veteran buyers who meet specific qualifications.  One of the primary reasons why a Veteran buyer obtains a VA Loan is because a buyer is able to finance 100% of the homes appraised value.  VA loans also allow a buyer to receive seller concessions to help cover the costs associated with buying a home.

 

Many of these frequently asked questions about mortgages are asked by first time buyers.  Since this is the case, many wonder if there are first time home buyer mortgages or programs available.  There are actually many lenders who offer some great programs for first time home buyers.

It’s important that you ask a top local mortgage lender or an experienced local Realtor if they know of any programs or mortgages available for first time home buyers since it can vary from City to City.

One example of a great program for first time home buyers located in New York State is the First Home Club Program.  The First Home Club program allows a buyer to receive up to $7,500 in grant money towards their closing costs.  The buyer is required to save roughly $1,900 over a minimum of a 10 month period in order to obtain the grant.  Certainly there are additional requirements that are necessary to get involved with the First Home Club and other home buyer programs.

It’s important to remember if you’re buying a home using grants that a seller may view your situation different than a buyer whom is getting a conventional mortgage and putting 20% down.  The primary reason a seller may think twice about accepting a purchase offer with grants or first time home buyer programs is because they don’t understand how they work.

The answer to whether a buyers interest rate will change or not is that it depends.  Depending on the type of mortgage a buyer obtains can determine whether or not their interest rate will change.  Mortgage products such as FHA mortgages in most cases will be a fixed rate mortgage, which means the interest rate will not change over the life of the loan.
A type of mortgage that can result in interest rate changes is known as an adjustable rate mortgage, which is also known as an ARM.  An adjustable rate mortgage will typically have a set amount of time in which the interest rate is fixed.  Once the fixed interest rate time is over, the rate will be subject to change.  ARM’s are not very common nowadays as most buyers prefer to have the “peace of mind” of their mortgage interest rate not changing drastically, which can drastically impact a month payment.

Some buyers hear the term mortgage points and wonder what exactly they are.  Paying for mortgage points is a fairly common practice.  Mortgage points generally come in two variations, discount points and origination points.  One point will generally cost 1% of the total amount that is mortgaged.

One benefit to purchasing mortgage points is to “buy down” an interest rate.  One point will generally reduce the interest rate by .25% which can save a significant amount of money for a borrower over a 30 year term.

Paying for mortgage points can be a great idea for some buyers and not such a great idea for others.  Ultimately, it’s important you understand what mortgage points are and also whether it would be beneficial to purchase points.  Asking a top mortgage consultant whether you should purchase points or not is usually a good way to know if it would benefit you or not.

A very common home buying misconception that exists is that a buyer needs a boatload of money to purchase a home.  This is not always the case.  When a buyer asks about the amount of money needed to buy a home, the best answer is that it depends.

Like mentioned above, the amount needed for a down payment will vary from one mortgage product to another.  There are other costs though involved in purchasing a home that many buyers don’t realize.  In addition to the down payment, buyers also need to consider costs such as an appraisal cost, home inspection cost, and other various costs.

Other typical costs and fees associated with buying a home which can impact the amount of money needed to buy a home include;

 

• Mortgage processing fee

• Real estate attorney fee

• Underwriting fee

• Bank attorney fee

 

These costs and fees all should be taken into consideration when determining the amount of money needed to buy a home.  There are many ways a buyer can purchase a home with little or no money.  A mortgage consultant should provide a buyer with a breakdown of the lender costs and a real estate professional should be able to give a general idea on how much a buyer can expect to spend on the miscellaneous fees such as inspections.

The amount of time it takes for a mortgage to get approved and financed will vary from lender to lender.  When shopping around for mortgages, it’s extremely important to have an idea on average how long a mortgage lender is taking to get their loans closed.  A top mortgage lender should be able to get a mortgage financed within 30-45 days from application.
At Mortgage Fast Lending we can get you approved in as little as 10 days, under the condition that all needed documentation has been submitted.

It’s important to understand that there are many factors why a mortgage approval can be delayed.  While going through the process of getting a mortgage, it’s important to stay in constant contact with the lender and make sure you get any requested document to the lender as soon as possible.

If a buyer does not cooperate with the lender in getting the required documentation in a timely manner, it may end up being the reason a closing is delayed or even worse, cancelled.

A bank appraisal can easily be defined as an unbiased professional opinion of a home’s value.  Anytime a buyer is obtaining a mortgage to purchase a home, the lender is going to require a bank appraisal be completed.  A bank appraisal also is required when a homeowner decides to refinance.

There are a couple different ways a bank appraiser will determine a home’s value.  The most common bank appraisal method is using the comparable property approach.  This is when an appraiser will look for at least a minimum of 3 recent sales of comparable properties that have sold in the past 12 months.  The appraiser will make adjustments to attempt to make the subject property as close to the comparable properties as they can.  Another appraisal method that an appraiser will sometimes use is the cost per square foot approach.

It’s important to understand that there can be problems with a bank appraisal which can stop a home purchase.  There are many appraisal issues that are common, such as a home value coming in lower than the sale price or the bank appraiser requiring repairs to be completed prior to the financing being approved.