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Questions and Tips

Q: What Do I Need to Provide to You for application or a Pre-Approval?
A:
You’ll need to provide the following:

Employment and Income Information

  • Your last two most recent tax returns with all schedules and W-2/1099 forms
  • Two most recent paystubs for all borrowers
  • If you receive child support, alimony or spousal support: a copy of your divorce decree or separation agreement
  • If you receive income from Social Security, retirement or disability – bring the most recent award letter or monthly statement

Personal Assets Information

  • Last two months statements (all pages) for all bank, investment & retirement accounts.  This would include CDs, stock or brokerage accounts, 401k and IRA accounts.
  • If statements only come quarterly, then bring the most recent quarter

Credit and Debt Information

  • The balances and account numbers of your current loans and debts, including car loans, credit card balances and any other loans you may have

The idea is to arrive at a monthly payment you can afford without creating financial hardships.  We can usually provide the credit approval for you within 48 hours, and having a pre-approval assists you in finding a home that you can afford and providing your Realtor with the information necessary about your finances to be able to make an offer on a home.

Q: What is the minimum down payment required on an FHA loan?
A: 3.5% of the purchase price

Q:  What is the maximum FHA loan amount?
A: The maximum FHA loan amount varies according to state and the county that you purchase in – so check with us to see what the max is for your area of interest. As of 2014, the current temporary maximum loan amount for the high cost areas of the country (like Northern Virginia) is $625,500.

Q:  Do FHA loans have PMI on them?
A: FHA loans have mortgage insurance but only conventional or non government insured loans can have PMI (private mortgage insurance) on them. FHA has its own mortgage insurance program and a portion of the cost is financed over the life of the loan, and the other portion is paid monthly in your total monthly house payment.

Q:  Does FHA allow for a co-signer?
A: FHA does allow for a non-occupant co-borrower, such as a family member, to help a buyer qualify to purchase a home.  It is one of the advantages of an FHA loan along with the lower down payment and more flexible qualifying ratios.

Q:  Does the VA allow me to get a VA loan even if I had one previously?
A: Yes, the VA does allow a subsequent use of your VA benefits but the previous loan must be paid in full, your eligibility must be restored by the VA prior to closing on the new home and in some cases, you may only have partial eligibility.  Check with us on your specific situation.

Q: Do VA loans have mortgage insurance on them?
A: No, but the VA has a Funding Fee which is applied to any VA loan except in instances where the veteran borrower has a VA related disability – and then the fee is waived.  The fee varies based upon a few factors, so call for details.

Q: For VHDA loans, what constitutes a “first time buyer”?
A: In order to qualify as a first time buyer, you cannot have owned a home within the last 3 years and tax returns will be required in order to make sure that no mortgage interest deduction was taken on your tax return.

Q: Is there a minimum required credit score for most loans?
A: Yes, most loan programs such as FHA, VA and Conventional loan programs currently require a 660 score. VHDA will accept a minimum score of 620.

Q: What is the difference between a Conventional loan and FHA?
A: Conventional loans, regardless of whether they are a fixed rate or not, imply that there is no governmental guarantee of the loan to protect the lender.  FHA and VA loans, are government insured loans that protect the lender against buyer default.  In a conventional loan situation, with less than 20% down, the buyer typically have to obtain PMI (Private Mortgage Insurance) which provides the lender will a certain level of insurance in the event of borrower default.

Q: What is mortgage insurance, or PMI, and does it protect me as the buyer?
A: Mortgage insurance, called PMI with a conventional loan or MIP with an FHA loan, does not provide the borrower with any type of insurance.  Mortgage insurance provides the lender with a certain guarantee of a portion of the loan amount that will be paid to the lender in the event that the home is foreclosed on and the lender has a loss on the property.  If a buyer wants insurance to protect against loss of income, sickness or illness – then we recommend speaking to a qualified insurance agent about term life insurance.