11 Questions to Ask Your Mortgage Lender

By Mandy Jordan

Questions To Ask To Ensure You Know Your Options

Purchasing a home may be the biggest investment you make in your lifetime. In 2016, more than six million homes were sold in the U.S. (that’s more than 1,600 homes every day!). Residential real estate transactions are just part of day-to-day business for mortgage lenders, but for you, the homebuyer, this may be a new experience.

It’s important to begin the home buying process with as much knowledge and information as possible. As you’re researching lenders, trying to find the best fit for you, here are some important questions you should ask:

What types of mortgages do you offer? When shopping mortgage lenders, you’ll find that different lenders offer different types of home loans. These can vary in amount, interest rate, term length and payment type. There are conventional loans (not insured by a federal agency) and government-insured loans. Some of the most common home loans include:

• Federal Housing Authority (FHA) — Government-insured by the Federal Housing Authority, this loan is best for clients with limited credit or income. Advantages include a low down payment and easier credit and income requirements.

• Veterans Affairs (VA) — Government-insured by the Department of Veterans Affairs, this loan is for eligible past or present services members and their spouses. Advantages include a low down payment, low interest rate and covered costs.

• US Department of Agriculture (USDA) — Government-insured by the US Department of Agriculture, this loan is for clients with a limited income in USDA designated rural areas. Advantages include 100 percent financing, eliminating the need for a down payment and assistance for limited income clients.

• 30-year Fixed-Rate Mortgage (FRM) — A conventional loan offered to long-term homeowners looking for stability. Advantages include a long-term interest rate and monthly payment stability.

• 15-year Fixed Rate Mortgage — A conventional loan for clients looking for stability and speedy payoff. Advantages include interest rate and payment stability, faster equity/payoff and less overall interest.

• Adjustable-Rate Mortgage (ARM) — A conventional loan idea for short-term homeowners and clients with future income growth potential. Advantages include a low initial interest rate.

• Jumbo Loans — A conventional loan for clients seeking higher value. Jumbo loans exceed the “conforming loan limit” set by the federal government, allowing the buyer to reduce the down payment for a more expensive home.

What type of mortgage is the best fit for me? Once you’ve submitted your mortgage application, your lender can make a recommendation on the best type of loan for you, based on your employment, income, assets, credit, debt, expenses, down payment and any additional financial information.

What is the estimated full cost of my mortgage? When shopping mortgage lenders, request a Good Faith Estimate (GFE), which provides a line-by-line estimate of all costs associated with your mortgage. This tool can help you compare the rates and costs associated with each lender.

What are the qualifying guidelines for this type of loan? While certain types of loans have certain guidelines (such as a VA loan is only for eligible veterans), your lender may have their own list of restrictions and will be able to tell you which loans you qualify for based on those guidelines.

Who will be the title and escrow agency? You may have the option to shop title companies to find one that could save you money on fees. You may also be able to do the same for an escrow agency and/or attorney.

What paperwork do I need? Be prepared to provide your lender with necessary documents, including proof of income (you’ll need two years of W-2s and paystubs) and assets (two most recent statements), personal identification and credit history. If you are self-employed, you’ll also need to have tax returns available. Be prepared for your home loan expert to request additional information throughout the approval process.

How long will it take to process my application? Once you supply required documents, the next steps will include an inspection, appraisal and final approval from the underwriter. In most cases, the process from application to close can take anywhere from a few weeks to a few months.

When will I close? Early in the process, your lender will give you an estimated closing date, but this date is not set in stone. Any number of factors could cause the closing date to fluctuate. Once your loan has been approved, you will be given the “clear to close,” and a final closing date, time and location will be set.

How much cash will I need at closing? At closing, you will need funds for your closing costs and down payment. Closing costs generally range from two to five percent of the purchase price of the home and include fees for pulling your credit report, document prep fees and fees for the inspection, appraisal and necessary surveys. Closing costs also include the brokerage commission, which is the amount paid to your real estate agent. These costs may be negotiated with either the buyer or seller agreeing to cover some or all of the closing costs.

What can I do to avoid delays? At the start of the process, your lender will provide you with recommendations to ensure the purchase process is speedy and smooth. These general recommendations include fully completing all required documents, being available to answer questions, being prepared to answer any questions and provide additional documentation, reviewing your credit report for errors and maintaining the same job during the process.

Will my loan get sold? It isn’t uncommon for mortgage loans, especially smaller loans to be sold to a new servicing company within the first few months after closing. If this happens, your lender will notify you in writing, so you will know where to send your next mortgage payment. The sale of your mortgage will not impact the overall cost of your loan.

Are you shopping for home lenders, or ready to take submit your mortgage application? Contact me. I'm happy to answer your questions and help get the process started.

8 VA Home Loan Benefits You May Not Know About

A Guide To VA Home Loans In 2018

By Greg Kummer

Posted March 30, 2018

Whether you’re a military Veteran or in active duty, a Veterans Administration (VA) home loan can help you land a home you love and save you a ton of money in the process. But did you know that only about 6% of U.S military Veterans and active service members are actually taking advantage of this powerful, government-backed home loan? If you’re currently serving (or have served) in the military, it’s a great time to make the most of this money-saving resource and achieve your dreams of homeownership.

Here are some incredible benefits of a VA home loan that you may not have realized you have access to.

1. VA loans require zero down payment

While a majority of home loan programs require a down payment, the VA home loan is a notable exception. Provided you are eligible for this special loan, you have the opportunity to finance up to 100 percent of a home’s purchase price instead of paying up front.

2. VA loans are guaranteed by the government

Because the VA loan is backed by the government, they guarantee repayment to the lender in the event you cannot make monthly payments. As a result, lenders are encouraged to offer VA loans and help those who are or have served in our country’s military.

3. VA loans do not have set rates

VA home loans are not funded by the VA, and VA home loan rates are not set by the VA. U.S. banks and mortgage lenders set each of their own VA loan rates, so you can still do some cost comparison between lenders and find the right loan for you and your financial situation.

4. VA loans do not require you to pay for PMI

In general, mortgage lenders will require you to pay for mortgage insurance when you make a down payment of less than 20%. This is known as Private Mortgage Insurance (PMI) and serves to protect the lender in case a buyer can’t pay for their loan. VA loans, however, do not require you to pay for mortgage insurance, making the home buying process much more affordable for you.

5. The VA places a limit on lender closing costs

For many loans, closing costs may vary from lender to lender, but with a VA loan, lenders have a limit on what they can charge. This makes a VA home loan even more affordable, and you can use the money you saved on other things like moving costs or furnishing your new home.

6. There are a variety of VA loans available

If you are eligible for a VA loan, you can buy a house, condo or other various properties. A VA loan can also be used to refinance your current mortgage, or even allow you to make much-needed repairs to your home. Overall, VA loans offer you a wide range options, so make sure to contact a Loan Officer to help you decide which loan option is right for you.

7. Qualifying for a VA loan is easier than you think

When you apply for any mortgage, a lender generally looks for legal documentation, a positive credit history, and a way to ensure you can make your monthly payments. The U.S. Department of Veterans Affairs, however, makes guidelines for VA home loans more flexible to accommodate and reward those who are serving or have served in the military.

8. VA loan eligibility can be transferred to a surviving spouse

To help provide more security for your family, VA loan eligibility can be transferred to your surviving spouse. As long as the requirements are met, your spouse will be eligible for the same VA loan benefits that you are and can help them purchase a home with zero down payment, and save them on other home buying costs.

Wondering if you’re eligible for VA financing?

You are eligible for a VA home loan if you are an active servicemember, a Veteran or (as mentioned above) if you are the surviving spouse of a fallen Servicemember. Your eligibility does not expire and if you are a Veteran who has used their VA benefits before, you can continue using them indefinitely.

Final Thoughts

If you have served (or are serving) in the military, not only do you deserve respect for your hard work and dedication to our country, you deserve to find a place you can call your home. The home buying journey can be complex, but PrimeLending is here to make financing your next home a simple and hassle-free process. We’ll help you close quickly and confidently, and make sure you get the most from your VA loan benefits. For more information, reach out to a PrimeLending mortgage expert in your area today.

All loans subject to credit approval. Rates and fees subject to change. Mortgage financing provided by PrimeLending, a PlainsCapital Company an Equal Housing Lender. ©2018 PrimeLending, a PlainsCapital Company (NMLS: 13649).

What’s Up With Your Down Payment?

Is 20% Outdated Advice? Here’s What You Need To Know

According to Zillow, the median home sales price is $238,700 — which means a traditional down payment of 20% would be nearly $50,000. But if that size down payment is overwhelming, don’t feel discouraged. More and more mortgage programs allow borrowers to qualify with less than 20% to put down.

In fact, that well-known percentage is really just a myth.

Depending on the type of home loan, your credit history and personal financial situation, you may be eligible to put as little as 3% down, or even less for VA and USDA mortgages that require zero down1. According to the National Association of Realtors, the average down payment for first-time home buyers in 2016 was 6%, and just 14% for repeat buyers.

In addition to a lower upfront cash investment, here are other benefits of putting less than 20 percent down.

Preserve your investments and retirement. It may be tempting to dip into your 401k for a down payment, but that’s not generally recommended advice. In some cases, while mortgage rates remain low, it may make more sense to put less down on your home and preserve your retirement funds or put the difference in a high-yield investment. Check with your financial advisor or tax accountant to understand the fill impact2.

Keep cash on hand. A smaller down payment means you’ll have access to more cash in case of a change in your financial situation, such as a job loss or unexpected medical expenses. That extra cash can also come in handy should your new home need any repairs or improvements.

Buy now, save more. Buying now, even with a lower down payment could end up saving you, too. Home prices continue to rise at a rate of about five percent per year. Waiting to buy until you have 20 percent saved up could mean you end up paying more for your home in the long run.

Make progress toward other financial goals. Putting less down on your home purchase frees up more cash to chip away at student loans, credit card debt and other long-term financial goals.

Of course, there are still some advantages to making a higher down payment. If you can come up with a down payment of 10%, you’ll have more options, even with a lower credit score. For example, you may qualify for an FHA loan with a FICO score as low as 520 if you can swing a 10% down payment1. A higher down payment also typically means better interest rates and you’ll have more equity in the home.

So what is the advantage to putting down 20%? One obvious benefit is avoiding PMI (private mortgage insurance). A down payment of less than 20 percent will require you to purchase PMI, which can cost anywhere from .5 to 1% of your total loan amount, potentially hundreds of dollars to your monthly payments. The good news is that once you’ve built up 20% equity, you’ll be eligible to drop the PMI. For some buyers, the higher monthly payment is easier to swallow than making a higher down payment. Your home loan expert at PrimeLending can help you run the numbers and decide which scenario makes sense for you.

So how do you know what the right down payment is for you? There are a few factors to consider.

1. How soon are you planning to purchase a home? If you need to move sooner rather than later and simply don’t have time to save, talk to your mortgage lender about your options for a low down payment loan, such as an FHA or USDA loan.

2. Consider how much you have saved and how much you can really afford to put down. Use a mortgage calculator to compare monthly payments with varying down payments and loan terms to find the number that works best for you.

3. Contact a PrimeLending mortgage expert to help you assess all your options. They can help you prequalified3 and find out what loan programs – and down payment scenarios –you qualify for. Our loan expert will review your income, credit and other factors to determine your eligibility for different mortgage programs.

1ADDITIONAL RESTRICTIONS MAY APPLY.  CONTACT YOUR PRIMELENDING LOAN OFFICER FOR MORE DETAILS.

2PRIMELENDING IS NOT AUTHORIZED TO GIVE TAX ADVICE. PLEASE CONSULT YOUR TAX ADVISER FOR TAX ADVICE FOR YOUR SPECIFIC SITUATION.

3A PREQUALIFICATION IS NOT AN APPROVAL OF CREDIT, AND DOES NOT SIGNIFY THAT UNDERWRITING REQUIREMENTS HAVE BEEN MET.