| 1. |
How do I know how much
I can afford when purchasing a new home?
Typically, an Underwriter would approve your loan request
if your new housing payment did not exceed 32% - 35% of your
gross monthly income, and your total debts (including car
loans, minimum credit card payments etc.) did not exceed 42%
- 45% of your gross monthly income.
|
| 2. |
What is the minimum down payment required
on the purchase of a home?
The minimum down payment most lenders will accept is zero.
This can be constructed with either an 80/20 combination or
a single loan of 100% plus PMI. Many first time buyers can
take advantage of this offer. |
| 3. |
Why are your rates better than what a
bank might offer?
We sell to as many as twenty different institutions that offer
us loans at wholesale rates. In most situations, we can offer
those same loans at a discount to you.
|
| 4. |
What is the difference between an ARM
(Adjustable Rate Mortgage) and a Balloon Mortgage?
An ARM loan has an initial fixed rate period after which it
adjusts (usually annually) according to an index plus a margin.
The ARM loan has year to year and lifetime caps that provide
the borrower with a predetermined maximum interest rate. The
Balloon Mortgage is fixed for a preset time period (usually
5 or 7 years) and then either becomes due in full or may have
a refinance provision. There is no rate cap guarantee associated
with a Balloon Mortgage.
|
| 5. |
What is Private Mortgage Insurance, (PMI)
and under what circumstances do I need it?
PMI is an additional insurance required by most lenders if your
first mortgage loan exceeds 80% of the lower of the purchase
price or appraised value of your home. This borrower paid fee
is a way to make the risk of your loan similar to one with a
20% down payment.
|
| 6. |
What items are considered closing costs?
Closing costs include but are not limited to fees for appraisal,
credit report, tax service, processing, underwriting, document
preparation, flood certificate, funding, title insurance, title
closing, recording, attorney and transfer tax.
|
| 7. |
What are lender escrows?
In Illinois, lender escrows are monies collected by the title
company at closing to pay for current interest and future real
estate taxes, homeowners insurance and PMI (if necessary).
|
| 8. |
What documents are usually asked for
when applying for a mortgage?
Usually the underwriter needs a copy of your most recent W2,
most recent 30 days of pay stubs and a recent month’s
bank or brokerage statement verifying your ownership of enough
funds to cover the down payment and/or closing costs and escrows.
In addition, if you are self-employed, the most recent two years
of federal tax returns are required.
|
| 9. |
What is a No Doc or No Income loan?
The NIV (no income verification) loan refers to a limited documentation
process where neither pay stubs, W2’s nor tax returns
are submitted to the underwriter for their consideration when
approving your loan. The underwriter relies more on a review
of your credit history, credit scores, home appraisal and savings
pattern to reach a conclusion.
|
| 10. |
How long does the process take, from
start to finish?
Some loans can take only a few days to complete, but the usual
time frame is 2 to 4 weeks. |
