Frequently Asked Questions

What are Pros and Cons of Rent vs. Buy? What’s right for you depends on a number of factors. Are you expanding or downsizing? Are you looking to move again within the year or hoping to stay long-term? It’s important to know what you want and need out of a home.

·         Renting Benefits: Renting gives you short-term flexibility and movement, without having to worry about covering the cost of repairs and maintenance, at a fixed cost for the term of your lease.

·         Buying Benefits: Homeownership creates the potential for long-term consistency and the ability to build equity over time. Interest and property taxes on your property are usually tax deductible.

I’m ready to apply for a loan. How do I begin? Give us a call, or contact one of our loan officers directly, and we will guide you through our streamlined process for mortgage application. Alternatively, you can also start a mortgage loan application by clicking on our Application Page, fill out a mortgage loan application on our secured portal, one of our experienced loan officer will review your application and contact you within 24 hours to discuss your application.

What documents do I need to apply for a mortgage loan? Required documents vary with loan programs and not all documents are applicable or required. Below is a checklist of most common documents to provide proof of income, asset and borrower’s scenarios. We also offer a wide range of programs under Alternative-Documentation, contact us and one of our experienced loan officers will gladly guide you through this process.

Proof of Income: You will be required to provide documentation for all sources of your income, and the requirements will vary depending on the type of income you are receiving. Alternatively, we also have programs to qualify borrowers based on assets. Contact one of our experienced loan officers for more information.

·         Pay stubs from the last two most recent months.

·         W2s for the last 2 years.

·         Tax returns for the last 2 years (common for self-employment, rental income, and commission income).

·         1099s (common for contract employees).

·         Social Security award letter (common for people receiving Social Security benefits).

·         Profit and loss statements and/or business tax returns (common for business owners).

Asset Statements: Below you will find a common checklist to document your assets. Not all documents are applicable and required. Contact us and one of our experienced loan officers will gladly guide you through this process.

·         Checking account statements

·         Saving account statements

·         Bonds

·         Investment accounts

·         Retirement accounts

·         Business accounts

·         Certificates of deposit

Other Documents and Information: Not all documents are applicable, required and dependent on loan program. Contact us and one of our experienced loan officers will gladly guide you through this process.

·         State issued photo ID.

·         Employer name(s) and address(es) for the past 2 years.

·         Residential address(es) for the past 2 years.

·         Divorce paper (if applicable)

·         Gift letters (if using gift funds)

·         Bankruptcy documents (if applicable).

·         Social Security card, ITIN, or other similar documents.

·         Business license (if self-employed).


What is a Pre-Approval Letter and how do I get one? The pre-approval letter tells you the maximum amount you are qualified to borrow. Getting pre-approved is not a loan guarantee; it simply states how much the lender is willing to lend you — pending forthcoming details, such as the value of the home and the specifics of your loan. This pre-approval allows you to look for a home with greater confidence and demonstrates to the seller that you are a serious buyer. To get pre-approved, you'll need to complete the loan application, providing important information about your credit, debt, work history, down payment and residential history. This information helps determine how much you may be qualified to borrow based on the 4 C’s:

If you qualify for a loan, you'll receive a pre-approval in writing that outlines the maximum amount you can borrow. Remember, it's a maximum, and not necessarily the amount you should borrow. You'll want to stay within your budget and comfort level.


How much do I need for Down Payment? The down payment is the initial amount a homeowner must pay for their property. It's typically a percentage of the home's purchase price. The down payment is due at your home loan closing and can be one of the biggest perceived financial barriers for hopeful homeowners. Although a 20% down payment can help borrowers avoid private mortgage insurance (PMI) on conventional loans, there are programs that allow down payments as low as 3%. A wide variety of financing options and programs are available, many geared toward low- and moderate-income borrowers.


What is Private Mortgage Insurance? If a homebuyer makes a down payment of less than 20%, the lender may require private mortgage insurance (PMI) for a conventional loan. This coverage protects the lender if there is a default on the loan. The cost for this insurance can be paid in full at closing or monthly. Once 20% equity in the property has been reached, you have the right to request to cancel PMI.


What are the fees and expenses associated with Closing Cost? Closing costs are the different fees and expenses associated with processing and finalizing your home loan. Recording fees, an appraisal, mortgage insurance (if applicable), property taxes, and homeowners’ insurance are some of the fees that may apply.

There are typically three types of costs to expect at closing:

·         Lender fees: Origination, application, processing, and underwriting fees and discount points. Lender fees are specific to each lender.

·         Third-party fees: Title search fees, title insurance, attorney fees, recording fees, and tax certification; in some cases, appraisal and inspection fees are listed on the closing disclosure as paid, however those funds are spent at the time of service.

o Appraisal fee: Your mortgage lender will most likely require a home appraisal, which is intended to provide an unbiased estimate of the property’s fair market value.

·         Miscellaneous fees: Private mortgage insurance (if less than 20% down payment) and/or an escrow account (for paying property taxes and hazard insurance).


What is an Escrow Account? Some lenders will require an escrow account. This is an account in which funds are held by a mortgage servicer to pay for certain property-related expenses. After closing, a portion of the monthly mortgage payment goes into the escrow account so that the mortgage servicer can make property tax and insurance payments on the borrower’s behalf.

Why is this helpful to first-time buyers and buyers without significant savings? It allows homeowners to set aside a small monthly amount instead of having to plan for a large semi-annual or annual expense. However, it’s important to note that it will have an impact on your monthly mortgage payment and should be accounted for in any budgeting or planning.


Do I need expense reserve as a homeowner? As a homeowner, you’ll be responsible for any unexpected expenses, such as a broken heating, ventilation, and air conditioning (HVAC) system or a malfunctioning appliance. So, it’s important to build up cash reserves — funds that you can access quickly to cover your mortgage payment and other housing-related expenses — before you start the homebuying process. Saving between three and six months’ worth of essential expenses in a “rainy day fund” can help prepare you for unexpected costs or situations like a loss of employment or large medical expenses.


What is Debt-To-Income (DTI) ratio? Debt-to-income (DTI) ratio is the amount you owe on all outstanding debts compared to your income before taxes and is shown as a percentage. A low percentage helps increase your access to new loans. Paying off existing debts and not incurring new debts help to lower this number. While your DTI may not impact your credit score, it is a key indicator lenders use to understand whether you can afford a mortgage payment.


Why are my credit scores so important? The way your credit is gauged is through your credit score. The better your credit score, the more likely a creditor is to trust that you will pay them back. A strong credit history can help you towards your goal of homeownership. There are three primary national credit bureaus that monitor and report on your credit — Equifax, Experian, and TransUnion. Your credit score is one important factor towards becoming approved for a mortgage. Your credit score can affect where you qualify for a loan, as well as the type of loan and loan terms. You may still be approved for a mortgage with a lower credit score, but you may have to pay a higher interest rate.


How credit is reported? There are three primary national credit bureaus that monitor and report on your credit — Equifax, Experian, and TransUnion. Your credit score is one important factor towards becoming approved for a mortgage. Your credit score can affect where you qualify for a loan, as well as the type of loan and loan terms. You may still be approved for a mortgage with a lower credit score, but you may have to pay a higher interest rate.


Build a credit history? You can start building your credit by opening and using credit cards in moderation. If you don’t have a credit card, try applying for one from a department store or applying for a secured card from a bank—one that typically requires a cash security deposit. Keep in mind that these options usually have a lower balance limit and a higher interest rate, so you’ll want to use them in moderation and pay your bills on time. Showing consistent on-time payments will help you establish your credit history and strengthen your score. By building and using credit responsibly, you’re helping establish a credit history that can be used to help you achieve your financial goals. When you apply for credit such as a car loan, renting an apartment or house, or even a mortgage, the creditor will check your credit history. If you have consistently made your credit payments on time, the creditor will take that into account when evaluating you for a loan. This can make a difference in whether you are approved for the loan.


Does checking my credit score cause it to go down? Your credit score is only affected when a lender checks your credit score because you have applied for a loan or credit card. This is called a “hard inquiry.” “Soft inquiries” are when your credit score is checked by you or as part of a background check or when a financial institution offers you a pre-approved credit card or loan, which does not impact your credit score. Hard inquiries stay on your credit report for two years.


I have had delinquencies in the past but have been building good credit the past few years. How long will my bad debts stay on my credit report? Most delinquencies will be removed from your credit reports after seven years, with the exception of bankruptcy which may remain on your reports for ten years. When rebuilding credit after having bad debts, it’s very important to monitor your credit reports and, if the bad debts aren’t removed, file a dispute with the reporting bureaus. If you can, pay your bills on-time, as a consistent, long history of on-time payments can help you recover ahead of the seven years.


What is mortgage loan refinance? For instance, if you have an adjustable-rate mortgage or your monthly payments are becoming unmanageable, refinancing may be able to lower your monthly payments, shorten the term of your loan, or offer a bit more financial security. Like your original mortgage, refinancing requires lender approval and has costs associated with the application and closing processes.

Reasons to refinance:

·         Lower monthly payments: As interest rates change, you may be able to refinance at a lower rate than you have with your current mortgage. This could decrease the amount you pay each month, reduce the total amount of interest you pay over the life of the loan, or both. Keep in mind, your exact interest rate will be based on multiple factors, including market conditions and your credit score.


·         Build equity faster: Equity — which is the difference between what your home is currently worth and the amount you still owe on your home loan — determines the profit you can make when you sell your home. You may be able to build equity faster by refinancing with a shorter-term loan — changing from 30 years to 15 years, for example. Although your monthly payments may increase in this scenario, the total amount you’ll pay over time will typically be lower because you’ll be paying less interest overall.


·         Gain more stability: If your current loan is an adjustable-rate mortgage (ARM), refinancing to a fixed-rate mortgage may offer more financial stability by making your monthly payments more predictable. For an ARM, the required monthly payment amount can change over time, which may cause financial difficulties. Refinancing can lock in a regular monthly payment.


·         Finance home renovations: Refinancing your mortgage may be a cost-effective way to pay for home renovations. Special refinancing options combine the cost of both the home itself and any new renovations into a single mortgage with a single monthly payment. This simplified financing makes it easier to upgrade your home and may even increase its value.


·         Use your equity: You can take advantage of the equity you already have in your home with a cash-out refinance, which provides cash for renovations, reducing other debt, or other purposes. The cash you receive is added to the total balance of your new mortgage loan. A cash-out refinance is likely to reduce the amount of equity in your home, extend the time it takes to pay off your mortgage, and require you to pay more total interest — so consider carefully before pursuing this option.