Why Get Pre-Qualified?

1. Pre-qualification acts as a dry run of the loan application process. The mortgage lender will use details you provide about your credit, income, assets and debts to arrive at an estimate of how much mortgage you can afford. The whole process may take only minutes or a few hours at most, and is free with no obligation.

Click here to start the easy online pre approval process with our partners Guaranteed Rate Affinity and CT Hancock, a local Austin Texas mortgage adviser.  

2. While a "pre-qual" is non-binding to the lender (because the information you provide has not been verified), it does serve as a good indication to potential sellers of your general creditworthiness.

3. These days most sellers will not accept an offer without at least a pre-qualification letter, so if you are serious about buying this is the first step towards getting you in your new home.

4. Buyers are not getting their hopes up on what they might be able to afford and in turn searching for homes in or under their price range.

5. Most real estate agents will not put a buyer in the car to show property without a pre-qualification letter.  

 

Understanding the loan process

1. Loan is submitted to processing after getting under contract on a home

  • The mortgage consultant collects and verifies all documents necessary to prepare the loan file for underwriting. These documents provide us with everything that we need to know about the borrower, and the property they are financing.
  • During processing, the mortgage consultant:
    • Begins verifying assets, income and employment
    • Orders a home appraisal to determine the value of the property which is purchased by the buyer
    • Runs various compliance and eligibility checks to ensure the process advances quickly and smoothly
  • Common documentation requested by underwriting includes:
    • Evidence of Earnest Money
    • Asset Verification
    • Borrower Letter of Explanation (LOX)
    • Gift Letter
    • Copy of Note
    • Source Large Deposits
    • Verification of Employment (VOE)
    • Fully Executed Sales Contract
  • Next step: Processing submits the loan file to underwriting for initial review and approval.

2. Loan is submitted to underwriting

  • The underwriter begins reviewing all documentation to determine whether the borrower qualifies for a mortgage.
  • While the mortgage professional and loan processor will do their best to submit a complete file, an underwriter may still have questions and/or require additional documentation to satisfy any conditions for a final approval.
  • In addition to the loan file submitted by processing, the underwriter examines:
    • The completed appraisal
    • Credit report
    • Other ancillary documentation pertinent to the loan
  • If the loan is approved, the borrower receives a list of conditions required to be met before receiving the loan documents.
  • Next step: The loan coordinator contacts the borrower to provide them with underwriting's preliminary decision on the loan.

3. Loan is conditionally approved

  • A conditional approval means that the underwriter has signed-off on the parameters of the loan and most of the documentation, but still needs a few more items before fully approving the borrower.
  • The loan coordinator contacts the borrower to review the conditional approval and discuss any items needed from them, as well as any ancillary documents that we needed to finalize the loan. This documentation can include:
    • The completed appraisal
    • Additional verification and standard in-house items required for closing
  • Once all conditions have been obtained, the loan coordinator will send the file back to the underwriter for a final review and approval.
  • Next step: Once the loan is approved, a mortgage professional will schedule the closing.

4. Loan is Clear to Close

  • "Clear to Close" means the underwriter has signed-off on all documents and issued a final approval.
  • The mortgage team schedules the borrower's closing and reviews the Closing Disclosure (CD).
    • The CD is the standardized document that details the finalized terms for the loan, including a breakdown of all costs and fees.
  • Next step: Closing the mortgage.

5. Closing

  • Closing processes vary slightly depending on the type of transaction, as well as local, state and municipal laws.
  • The type of transaction—purchase or refinance—determines who can provide the borrower with accurate final numbers.
    • Purchase: The borrower can receive estimated figures from their mortgage professional, but they'll need to speak with the borrower's local title company or real estate attorney for a final amount.
    • Refinance: In most states, the borrower won't be required to use an attorney to close. In that case, the borrower should speak with their mortgage professional for their bottom-line.
  • What to bring to the closing:
    • Form(s) of photo identification
    • Check to cover the closing costs and down payment, unless the money was wired. Note, the borrower must only use funds from an approved account.
  • Whether purchasing or refinancing, prepare to sign a lot of documents!
    • Purchase: While the process varies by state, typically a professional explains every document and notes where to sign. The lender’s wire may need to clear before the borrower is handed the keys and provided with copies of all the documents.
    • Refinance: Depending on local laws, the borrower meets with an agent from the title company who explains each document to be signed. If refinancing a primary residence, the loan will fund once the 3-day right of rescission has expired (on the fourth day). Once the rescission period has expired, the loan can no longer be cancelled. If refinancing an investment property or second home, the loan will fund on the same day.
  • Next step: Funding the mortgage.

6. Loan has Funded

  • The final step in the loan process is now complete: the borrower's loan has funded!
  • At this time, all documentation is complete and the funds for the loan have been disbursed to the seller (purchase) or to the payoff of the prior loan (refinance).
  • The borrower should have received their first payment statement at the closing. This should be used to make the first and possibly second loan payment.
  • Final step: The borrower receives correspondence in the mail from their final servicer (the company to which they will make all subsequent payments). This information details where to make future payments and how to setup auto-pay if desired.

Learn More First Time Home Buyer Guide

Types of Loans Explained

Here are the primary highlights of a conventional mortgage loan:

  • Down payments typically start around 5% of the sale price

  • Mortgage insurance is not required if you put 20% down or 80% of loan-to-value (LTV: the ratio of a loan amount to the value of the home)

  • As mentioned above, the maximum loan amount is $453,100

  • Gift funds are allowed to be applied to the down payment is Conventional right for you?

  • While this may vary from lender-to-lender and state-to-state, here are the typical requirements to qualify for a conventional loan:

    • A steady employment history

    • Proof of income and assets

    • A healthy credit score (credit score requirements vary from lender-to-lender)

Here are the Primary Highlights of the VA Loan

If you’re looking to buy or refinance a home, the U.S. Government offers a number of mortgage products that are less restrictive and more affordable than conventional loans. Among them is the VA loan, backed by the U.S. Department of Veterans Affairs. Available to active and former American military service members, VA loans feature major benefits such as 0% down payment options and no requirement for private mortgage insurance (PMI).

Make sure to ask a mortgage expert if a VA home loan is right for you and your life situation. In the meantime, consider the details below for a clearer picture of the advantages and limitations involved:

Eligibility

Only veterans with honorable discharges are eligible for VA home loans.

Wartime

Service of 90 days or more, waived if applicant is discharged due to service-related disability.

Peacetime

Service of 181 days or more, waived if applicant is discharged due to service-related disability.

Reservist or National Guard

Service of at least 6 years.

Family benefits

Spouses of deceased service members are eligible for VA loan benefits, provided they have not remarried and that the deceased died in service or from a service-related disability, was missing in action or a prisoner of war for at least 90 days or was rated totally disabled and was eligible for disability compensation at the time of death. Children of deceased veterans are not eligible for VA mortgage loan benefits.

Creditworthiness

As with conventional loans, VA-approved lenders require certain credit and income minimums to justify the financial risk. Some use a 620 credit score as the rough benchmark, though each individual case and lender will vary.

VA loans don’t require a down payment for loan amounts at or under the local conforming loan limit. For most of the country, this amount is $453,100. The VA allows you to purchase jumbo loans, but requires that you supply 25% of the difference between the loan amount and the loan limit. This means there are no 0% down payment options for jumbo VA loans.

Learn More About VA Loans

Here are the primary highlights of a FHA Home Loan

Some new home buyers don’t consider government backed mortgages because they think they’re for people with lower incomes and credit scores. Sure, government loans are indeed wonderful options for less-qualified borrowers, but they also feature a number of benefits for other consumers. Take a closer look at the FHA home loan, backed by the U.S. Federal Housing Administration and managed by the U.S. Department of Housing and Urban Development (HUD). This increasingly popular mortgage requires a lower credit score to qualify, and gives you the option to put as little as 3.5% down.

It’s always best to consult with a mortgage expert when deciding if an FHA loan is right for you and your life situation. In the meantime, prepare for that all-important conversation by using the FHA mortgage breakdown below.

Eligibility

FHA loans have no geographical or income restrictions like USDA loans, nor do they require military service like VA loans. Among government loans, FHA mortgages are especially appealing because more borrowers can apply! Indeed, word is spreading among the younger set: In January 2017, FHA loans accounted for 35% of Millennial home purchases.

Creditworthiness

As with conventional mortgages, lenders need to see minimum credit figures to validate FHA loan approval. FHA loans offer a higher chance of approval, however, because they allow borrowers with lower credit scores to become homeowners. For conventional loans, lenders typically look for a credit score of 620 or above.  Most FHA-approved lenders look for a score of 580 or more to qualify for the 3.5% down payment.

Loan types
Purchase

One of the best aspects of FHA loans is the low interest rates that lenders offer, often very competitive with conventional mortgage rates. FHA products can take the form of fixed rate and adjustable rate mortgages (ARMs). With a 3.5% down-payment option, low rates and product flexibility, FHA home loans are incredibly attractive to those who qualify.

Refinance

The FHA allows for both streamline and cash-out refinancing. With the streamline option, the goals are to get a lower rate and make a lower monthly payment, so the value of the new loan won’t be more than the current loan. In this scenario, establishing the home’s value isn’t factored, so an appraisal isn’t necessary. In the cash-out option, the new loan will be larger, so the home’s value and borrower credit status will have to be re-evaluated.

For single unit properties FHA loan limits range from $294,515 to $679,650.  Four unit property FHA loan limits range from $566,425 to $1,307,175. Loan limits vary by county so talk to your loan officer for your county’s loan limit.

 

CLICK HERE FOR YOUR PRE APPROVAL AND LOW INTEREST RATE QUOTE WITH NO OBLIGATION

 CT Hancock and Guaranteed Rate Affinity is local and can sit down with you or he can do all on phone or computer.  Look at what people are saying about CT Click Here For Testimonials

 

 

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CT Hancock

VP of Mortgage Lending, NMLS: 241153

O:  512-814-4984

C:  512-584-7875

Christopher.hancock@grarate.com

Grarate.com/CTHancock

 
 

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