The Most Frequently Asked Mortgage Questions
Here we will cover many of the questions we have heard in the past from our customers. Do you have a question you would like us to answer? E-mail us. We will post a new questions and answers regularly, so check back often and keep learning!
1. What information do I need when I apply for my loan?
The lender will want to see the following items. Please keep in mind that you can’t get an approval if you do not have these items. It is important that you collect all items listed and provide them at the time of application. Depending on circumstances you may be asked to also provide additional documentation.
1. Two recent pay stubs
2. Last 2 years tax returns with the W-2 forms
3. Last 2 bank statements/401K statement/Mutual fund statement
4. Divorce decree (if applicable)
5. Bankruptcy papers (if applicable)
If this is a “no-doc” loan, tax returns may not be required. Other documentation may be required depending on your specific circumstances. For a refinance, information on your current mortgage(s) will also be required.
2. I don’t have 20% to put down on a home purchase. Is there any way to avoid PMI?
Yes there is! There are a few mortgage products available that combine a 1st and 2nd mortgage to avoid PMI. For instance if you had 10% down you may choose a 80%1st & 10% 2nd often written as 80/10. Because the first is only 80% of the value of the home there is no PMI. There are other combinations such as a 75/20 if you have 5% down or even an 80/20 if you do not have a down payment. You can even put the second mortgage on a 15 year term to help you build your equity faster!
3. Can I qualify if I have had late payments on my credit?
Generally speaking, yes, we can qualify you for a purchase, refinance or second mortgage even if you’ve had late payments! However, your credit must be looked at before an exact answer can be given. The lender may request more down payment in some circumstances to make up for their risk.
4. I am self-employed and have a lot of deductions, so I don’t show a lot of income on my tax returns. Can I get approved?
There are many options available today for the self-employed borrower or for the borrower who gets paid cash. No documentation loans (“No doc”) also referred to as stated income loans, “lite-doc” and “limited doc” loans give our borrowers more flexibility than some banks can only dream of!
5. What’s the difference between mortgage brokers and going to my local bank?
Some banks have limited programs available. Brokers may deal with over 25 different banks and lending institutions and actually have OVER 75 different programs available.
6. I’ve heard that if you go through a mortgage broker your loan will be sold more often. Is this true?
The selling of mortgage loan servicing is a given with modern banking. Most fixed – rate mortgages will be sold. This DOES NOT mean that your payments change. They do not. The only thing that can ever change is the name you write on your check and the address you send it to.
7. Why are second mortgage/home equity debt-consolidation loans and home improvement loans so popular?
For one reason, tax – deductibility. In most cases, you can deduct 100% of the interest on second mortgage/home equity loans that cover up to 100% of your house’s value. Of course, you should always check with your accountant to make sure.