1. How much of a home can I afford?
There are several factors that determine the loan amount and purchase price that you can afford. For qualification purposes, lenders look at income, debt, assets (how much money you have for the down payment, closing fees, points, and other funds necessary to close your loan), as well as credit. There are many different loan programs that offer different terms and rates, and some require lower down payments than others and offer more flexibility in credit and income. The best thing to do is get pre-approved so that you know what loan programs you qualify for, the price range you can afford, and what your monthly payments will be. 1st Securities Financial Services will provide a pre-approval certificate at no cost. You can also use our industry-leading calculators to find out what your payments would be and determine what purchase price and the loan amount is comfortable for you.
2. How much money do I need to buy a home?
Traditional conventional financing requires a down payment of 5% to 20% of the purchase price of the home; however, there are other programs available such as our FHA program that allows you to buy a home with as little as 3.5% down. In addition to the down payment, you should be aware that there are other fees associated with purchasing a home. For example, there are closing fees, pre-paid interest, and prorated items such as property taxes and homeowner's insurance. Call and speak with one of our licensed Loan Officers to get a better idea of what you can expect.
3. What do the closing costs include?
Closing cost are the fees paid to the 10+ business/companies that are involved in your real estate transaction (i.e., appraiser, surveyor, title company, tax certification, flood certification, courier, county clerk, attorney to draw the closing documentation, processor, mortgage closer, underwriter, loan officer, title closer, etc.).
4. What's the difference between a pre-qualification and a pre-approval?
A pre-qualification is an informal cursory review of your income, assets, and credit, usually conducted over the phone. Once the necessary information is gathered, the lender issues an estimate of loan amount and purchase price for which you qualify. A pre-qualification still gives a potential buyer a good idea of affordability but it is not as comprehensive as a pre-approval which is a more formal, more intense process where income, assets, and credit are documented and verified. A pre-approval is a conditional approval that holds more weight with a seller and the seller's real estate agent than a pre-qualification, especially if you are competing with another offer. For more information regarding our pre-approval process, please visit this page or talk to one of our licensed Loan Officers
5. What are the upfront costs?
Most lenders will require you to pay for your credit report and your appraisal upfront opposed to at the time of closing, because even if you do not close the appraiser and credit report companies must still be compensated. Typically the lender collects the fees when the formal loan application is made.
6. What type of documentation do I need for a purchase loan?
Standard documentation collected for a purchase transaction includes information regarding your income such as paystubs covering the most recent 30 days, W-2s, and tax returns from the last two years, asset information such as bank or mutual fund stock statements covering the last 60 days showing source of funds for your down payment, closing fees, points, pre-paid items, and other funds needed to close your loan.
7. How long is the purchase process?
A typical period is 30 to 45 days. The time period, defined on the purchase contract and agreed upon by both buyer and seller, is usually what dictates when your loan closes.
8. What's included in my house payment?
Your monthly mortgage payment generally includes principal interest, property taxes, hazard insurances (PITI) and mortgage insurance (if applicable), unless otherwise discussed.
9. What happens at the loan closing?
Typically, you will sign your loan documents at a designated settlement office such as a title company office or attorney's office. In the presence of the signing authority, you will review and sign all your loan documents and then present a certified or cashier's check to pay the remaining down payment, closing fees and other applicable closing funds. You may also wire your funds directly to the title company. Your loan processor will guide you through the process and will advise you on what needs to be done when. Once the loan documents are signed, you are the proud owner of your new home. Don't forget to change the locks!
10. When do my mortgage payments start?
Usually 30 days after closing. For example, if you close in August, your first payment is due on October 1 (skipping September). Payments are not late until the 15th of the month, but you should send your payment by the 5th to make certain you don’t incur late payments.