Posted by: Regent Homes, on January 15, 2015
Buying your first home can be both exciting and daunting. There are many forms to fill out, plenty of details to discuss, and a lot of questions to answer. During your initial pre-approval meetings with your bank or mortgage company, you need to address these questions to ensure the process runs smoothly.
What documents will I need for full approval?
The most important aspect of applying for a mortgage is the documents. Lots of documents. Identifying documents, proof of income, credit history, tax returns, bank statements. Before you even get to the meeting, ask what documents you should bring and what documents you will eventually have to provide. By sharing complete documentation with your loan officer, you can help secure full approval for your mortgage, in a timely manner.
How long will the approval process take?
The approval process includes sifting through documents, establishing debt-to-income ratios, verifying income, and much more. Most pre-approvals last 90 days from the running of your credit report. After you provide as much documentation as you can, you should get a rough estimate of the approval timeline from your loan officer.
What type of mortgage should we apply for and what are the terms?
There are many different types of mortgages – FHA, VA, USDA, Conventional, Jumbo – and each one comes with different requirements and approvals. FHA, USDA, and VA loans, for instance, are backed by the federal government, while conventional loans are not. Mortgages can last different lengths of time as well – usually 15, 20, 30, or 40 – there are also fixed and adjustable interest rates. All of these factors will affect the monthly cost and the probability of approval for your mortgage, so be sure to ask what type of mortgage best suits your situation.
Are taxes and insurance included in my monthly payment?
It’s important to know each cost that is included in your monthly payment, and whether your property taxes and homeowners insurance are part of the payment and are not lump sums. Many mortgage companies will collect taxes and insurance on a monthly basis and place them in escrow. Make sure you verify this with your loan officer, and include these costs in calculations of your monthly payment.
Will anything change the monthly payment in the future?
As you plan your own budget for the future, it’s important to know your monthly mortgage payment. Many first-time homeowners are surprised to see their payments fluctuate slightly from year to year. In order to understand how your monthly payment might change and what affects it, ask your loan officer how much it might fluctuate over the lifetime of the loan. Usually, fluctuations are caused by changes in property value and insurance premiums.
Prepare yourself with the right questions for your mortgage company and your home-buying experience will be simpler and more enjoyable, leaving you to focus instead on the exciting part: getting a new home!
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