Loan Process

The first step in obtaining a loan is to figure out how much you can borrow. If you’re buying a home, it’s crucial to know how much home you can afford before you begin looking. By answering a few simple questions, we can calculate your buying power based on standard lender guidelines.

Click here to Pre-Qualify

Alternatively, you may choose to get pre-approved for a loan, which involves verifying your income, credit, assets, and liabilities. It’s recommended that you get pre-approved before starting your house search, as this will allow you to:

• Search for properties within your price range.
• Be in a better position when negotiating with the seller (since they’ll know your loan is already approved)
• Close your loan more quickly.

LTV and Debt-to-Income Ratios

• LTV (Loan-To-Value) Ratio:
  The LTV ratio is the largest amount a lender is willing to finance for your purchase. Lenders are generally willing to finance a higher percentage of the property’s value, even up to 100%, for creditworthy borrowers. Lenders also consider your debt-to-income ratio (monthly debt payments compared to your income) when deciding the loan amount. The rule of thumb is that your monthly mortgage payments should not exceed 1/3 of your gross monthly income. If your debt-to-income ratio is high, you may need to make a larger down payment to qualify for a lower LTV ratio.

FICO™ Credit Score

• FICO™ Credit Score:
  FICO™ Credit Scores are a widely used measure of creditworthiness. This score is derived from mathematical models developed by Fair Isaac and Company and reflects an individual’s credit risk compared to the general population. FICO™ scores are influenced by several factors, including your payment history, total debt, length of credit history, and recent credit inquiries. When shopping for a credit card or loan, each time a lender runs your credit report, it can negatively affect your credit score. To avoid this, it’s advisable to authorize lenders to run your credit report only after you’ve chosen to apply for a loan.

Self-Employed Borrowers

• Self-Employed Borrowers:
  Self-employed individuals may face greater challenges when securing a loan compared to those with traditional employment. For most conventional lenders, the difficulty lies in verifying the income of self-employed applicants. While employed applicants can provide pay stubs verified through their employers, self-employed individuals must provide income tax returns, typically for the past two years, to verify their income.

Source of Down Payment

Source of Down Payment:
Lenders expect borrowers to provide sufficient cash for the down payment and other fees associated with the loan. Typically, down payment funds should come from the borrower’s savings. If a borrower does not have the required down payment, they may receive “gift funds” from an acceptable donor, along with a signed letter confirming that the gifted funds do not need to be repaid.

Home loans come in many shapes and sizes. Choosing the loan that best fits your financial situation and goals requires understanding the benefits of each option. Whether you are buying a home or refinancing, there are two basic types of home loans, each suited to unique needs.

1) Fixed Rate Mortgage

Fixed-rate mortgages typically have terms of 15 or 30 years. Throughout the loan’s term, both the interest rate and monthly payments stay the same. You would choose this type of loan if you:

• Plan to stay in your home for more than 7 years.
• Value the stability of a fixed principal and interest payment.
• Want to avoid the risk of future increases in monthly payments.
• Expect your income and spending to still be consistent.

2) Adjustable-Rate Mortgage (ARM)

Adjustable-Rate Mortgages (ARMs) also usually have terms of 15 or 30 years, but the interest rate can fluctuate over time. As a result, monthly payments may increase or decrease. This type of loan is suitable for you if you:

• Plan to stay in your home for less than 5 years.
• Are comfortable with periodic changes in your monthly payments (up or down).
• Are willing to accept the risk of potential payment increases in the future.
• Expect your income to increase over time.

By carefully considering these factors and seeking professional guidance, you can select the loan that best aligns with your current situation and future financial goals.

Click To Apply For A Loan

While lenders adhere to standards set by government agencies, loan approval guidelines may vary depending on the specific terms of each loan. In general, approval is based on two key factors: your ability and willingness to repay the loan and the value of the property.

Once your loan application has been received, we will start the loan approval process promptly. Your loan processor will verify all the information you’ve provided. If any discrepancies are found, either the processor or your loan officer will resolve them. This information includes:

1) Income/Employment Check

• Is your income sufficient to cover monthly payments? Industry guidelines will be used to evaluate your income and debt load.

2) Credit Check

• What is your ability to repay debts when due? Your credit report will be reviewed to assess the type and terms of earlier loans. Any lapses or delays in payments will be considered and must be explained.

3) Asset Evaluation

• Do you have sufficient funds for the down payment and closing costs?

4) Property Appraisal

• Is the property valued adequately? The property will be appraised to figure out its market value, considering factors like location and zoning.

5) Other Documentation

• In certain cases, added documentation may be needed before a final determination about loan approval is made.

To improve your chances of securing loan approval:

• Complete your loan application in full. Use our online forms to speed up the process.
• Respond promptly to any request for more documentation, especially if your rate is locked or if you have a specific closing date.
• Avoid transferring money into or out of your bank accounts without a documented trial. If you receive funds from family or friends, prepare a gift letter and contact us.
• Refrain from making significant purchases until your loan is closed. Major purchases increase your debt, which could negatively affect your application.
• If you plan to be out of town around your loan’s closing date, consider signing a Power of Attorney.

After your loan has been approved, you are ready to sign the final loan documents. Prior to signing, it’s essential to review the documents carefully and ensure that the interest rate and loan terms align with what was promised. Additionally, confirm that your name and address are correctly said in the documents. The signing typically occurs in the presence of a notary public.

There are several fees associated with obtaining a mortgage and transferring property ownership, which you will have to pay at closing. Be prepared to bring a cashier’s check for the down payment and closing costs, if applicable, as personal checks are generally not accepted. You will also need to provide proof of your homeowner’s insurance policy, and depending on the property, added requirements such as flood insurance, along with proof of payment.

Once the loan documents are signed, your loan will generally close shortly thereafter. Please note, for owner-occupied refinance transactions, federal law mandates that you have a 3-day period to review the documents before the loan transaction can close.