Question 1

Pre-Approval - What documents do I need to get pre-approved?

Accepted Answer

In general, you will need a driver's license, two pay stubs, two W-2s, and two Bank Statements.  If you are self-employed, documents will vary, so reach out with questions!

Question 2

Pre-Approval - Will filling out the application hurt or ding my credit score?

Accepted Answer

No! We do not do a hard credit pull upfront.  We only do a soft pull to gather necessary credit information, so it will not hurt your score!

Question 3

Negotiation - Can I have the seller pay my closing costs?

Accepted Answer

Yes you can!  The best way is to negotiate "seller credits".   For example, let's say you found a house for 400K. You can offer 400K (the price they want), and ask for 10K in seller credits in return.  If the sellers accept your offer, the 10K in seller credits can now be used to pay your closing costs!

Remember - Everything is negotiable.

Question 4

Process - How long does it take to close on a home?

Accepted Answer

It can vary, but the industry standard is 30 days.  Some buyers and sellers agree to close in 14 days, while others agree for up to 60 days.  It also depends on how quickly we receive the buyer's documents, appraisal report, and title documents back for closing.  For tips on how to close fast, reach out!

Question 5

Process - What are the things that can go wrong when buying a home?

Accepted Answer

Because there are many moving parts to the home-buying process, there can be several things to watch out for.

1) Do NOT take on new debt.  New debt can disqualify you from buying.
2) A low appraisal value.  Low appraisals can happen and there are ways to help negotiate if and when it happens. 
3) A bad home inspection.  There is no such thing as a perfect home, and some homes have more issues than others. 
4) Death/Disability/Divorce.  Sometimes people have complicated relationships or big life events.  This can affect the timeline to close or cancel the transaction altogether.
5) Money.  Having enough money to close and having it organized can make or break your purchase.  Everything must be documented when obtaining a mortgage.

Question 6

Process - What is the first thing I need to do when I go Under Contract?

Accepted Answer

The first thing will be to give your Earnest Money Deposit to the Title Company or Attorney, as your "good-faith deposit."  Next is to get your Home Inspection scheduled with your agent, and lastly, is to call your lender on the next steps for your loan.

Your lender will guide you through the initial disclosures and the appraisal order as the very first steps to get your loan started!  You may need to update your documents depending on when you were pre-approved initially.

Question 7

Appraisal - What are potential red flags on an appraisal?

Accepted Answer

Usually, any safety-related items will be important for an appraiser to look at and can be flagged on an appraisal.  This includes: Broken windows, peeling paint, mold, insect infestation, loose wiring, broken or missing handrails, leaks, wood rot, etc...

Question 8

Appraisal - Do I have to get a home inspection and appraisal to buy a home?

Accepted Answer

Inspection - The technical answer is no, you are not required to get a home inspection.  However, it is highly recommended that you do get one. A $500-$600 home inspection could save you from a $10,000 problem. The return on investment is huge, and you can make the sellers pay for the repairs in most cases!

Appraisal - Yes, you are required to get an appraisal by the lender.   This is because the lender is making sure the home is actually worth the money you are paying for it!  It's a good thing!

Question 9

Loan Type - Can I use my VA loan more than once?

Accepted Answer

Yes, of course! Your VA home loan can be used as many times as you want, as long as you are buying a primary residence.  I help you calculate your remaining entitlement upfront, so you know all of the details about your next purchase.

Question 10

Loan Type - What are the benefits of a VA Loan?

Accepted Answer

The VA loan has many benefits, including no PMI (private mortgage insurance), 0% down payment, and lower market interest rates compared to Conventional loans.  This helps you save hundreds of dollars monthly compared to most borrowers.

Remember - The Department of Veterans Affairs does not lend money.  The VA insures VA loans to give you these amazing benefits by reducing the risk to lenders who lend the money for your VA home purchase.

Question 11

Loan Type - What credit score do I need for an FHA loan?

Accepted Answer

For an FHA loan, you need a 580+ credit score to put a minimum of 3.5% down payment.  If you have a score below 580, you need 10% down payment.

Question 12

Definitions - What is a Bank Statement Loan?

Accepted Answer

A Bank Statement loan is where you use 12 months of personal or business bank statements to calculate your income, rather than traditional paystubs/W2s/Tax Returns.

Bank Statement loans were made for self employed borrowers because most businesses write off expenses to lower their taxable income.  Bank Statement loans increase purchasing power by showing more income, without including write-offs. This helps gauge a better picture of our total gross income that we can use for our approval.

Question 13

Definitions - What is a DSCR loan?

Accepted Answer

A DSCR loan stands for "Debt Service Coverage Ratio" loan used for investment properties only.  This means that as long as the potential rental income covers your total mortgage payment (PITIA), you qualify!  Must have a 680+ score and 20% down payment.

Question 14

Definitions - What is an Earnest Money Deposit?

Accepted Answer

An Earnest Money Deposit is your deposit that shows how serious you are about buying the home.  This money is held by a neutral 3rd party to ensure validity and transparency.  If you close on the home, this money gets applied to your down payment.  If you back out of the transaction within your agreed-upon contingency, you receive this money back.

Question 15

Definitions - What is an escrow or impound account?

Accepted Answer

An escrow account, also known as an impound account, is an account used by loan servicing companies (the people you make monthly payments to) to make sure your Home Insurance and Property Taxes are paid yearly.

Think of this as a side "checking account" that they hold to pay your taxes and insurance for you.   It helps servicing companies make sure that you stay caught up on the required property coverages and obligations.  There is no fee to have an escrow account!

Question 16

Refinance - If I already own a home, how do I skip two payments on a refinance?

Accepted Answer

Easy!  You need to close on your refinance 5 business days before the 15th of the month.  Mortgage payments are always due on the 1st of the month, but are not considered late until the 15th.  The reason for the 5 business day cushion is because of a rescission period that is required by law (and I dont want you to be late on your mortgage!)

For example, if your payment is due January 1st, you would be able to skip that payment entirely if we close on January 8th.  Because mortgage payments are due in arrears, you would also skip your February payment, and your new payment would start in March, thus skipping two whole payments!  Don't worry, I can easily guide you through this process when you are ready!

Question 17

Bonus - Can I waive my escrow account for property taxes and insurance?

Accepted Answer

Yes, you can!  Many lenders require you to have 20% equity in your home before waiving your escrow account; however, I work with lenders who will allow escrow waivers with as little as 3% down, and 0% down on VA loans!

Question 18

Bonus - What are appraisal waivers and how can I have my appraisal waived?

Accepted Answer

Appraisal Waivers, also called Property Inspection Waivers (PIWs), stem from a risk assessment of the overall profile of the client.  This can include the property type, location, credit analysis, loan-to-value, and much more.

Lenders can obtain PIWs by running your entire loan profile through a computer-generated system called AUS (Automated Underwriting System).  AUS determines, based on numerous loan factors, if your profile warrants an appraisal waiver.

Remember - PIWs are not dictated by the lender themselves; it's dictated by the overall loan profile.  Sometimes you get an appraisal waiver, and sometimes you don't!  Always assume you will need an appraisal for your home purchase or refinance.

Jon Puente

Branch Manager | The Best of Conventional, FHA, VA, DSCR, & Bank Statement Loans

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