The Mortgage Journey to Your New Home
You have decided to buy a house, congratulations! There are many questions for homebuyers but don’t worry, we are here to help you navigate the process. We sat down with Ben Crooks with Village Bank Mortgage, and he answered 10 of the most asked questions homebuyers have.
- What different types of mortgages are there, and which one is best for me?
There are many loan programs, but some of the standard programs are Conventional, FHA, VA, USDA, and VHDA loans. Finding out which program is best for you can only be determined based on your individual qualifications and what you are looking to accomplish with the home purchase. - How much down payment do I need?
Down payment will depend on which loan program you choose, and which one works best for your needs. There are programs that have no down payment obligation and others that have as little as 3% or 3.5% down. - What credit score do I need?
The minimum credit score needed to qualify is a 620 mid-credit score. However, exceptions can be made with scores as low as 580. - What are closing costs, points, and pre-paid items and how much should I expect them to be?
Closing Costs and Pre-paid items are expenses that go into closing a mortgage transaction. These fees are made up of many items, from recording fees, days interest, points, and title fees. These fees will change based on the purchase price and loan amount so always consult your lender to find out more. - Should I choose a fixed-rate or adjustable-rate mortgage?
Choosing between a fixed-rate program and an adjustable-rate mortgage or ARM will depend on your qualification and goals with the purchase. A fixed-rate is going to be stable, with no rate changes during the life of your loan. However, an ARM may offer a lower initial rate but is subject to change down the road. Meaning the rate could go up or down. - What documentation should I gather?
The basic list of items will be comprised of
– Last 2 years W2s/1099s
– Last 2 years of federal tax returns
– Most recent 2 paystubs
– Most recent 2 bank statements for asset accounts - What is the difference between a pre-approval and a pre-qualification?
A pre-qualification is based upon verbal information given by the client and review of a borrower’s credit report. A Pre-Approval is based upon a review of the needed documents for a loan. Village Bank Mortgage offers a VIP Pre-Approval with our in-house underwriting department. This provides peace of mind about their loan and approval. Our VIP (Very Important Purchase) program is designed to give your homebuyer more buying power and the ability to close as quickly as possible. How? With an upfront conditional approval underwritten in-house. Why get pre-qualified when you can get pre-approved? This gives all parties – homebuyer, Realtor, and seller – peace of mind and confidence during negotiation. - What are the steps in a mortgage loan?
Once you have a ratified contract you will make a formal application with your loan officer. You will discuss locking in your interest rate and sign your initial loan disclosures. Your lender will order an appraisal and work with you on completing any additional document requests needed to complete your loan. You will then sign an initial closing disclosure and be on your way to closing on your home. - What are the different parts of a mortgage payment?
PITI = Principle, interest, taxes, and insurance. These four basic items make up a mortgage payment. In addition to these items, you may be subject to Mortgage Insurance depending on program and down payment. - When is my first payment due?
Because mortgage payments are paid in arrears, your first mortgage payment after closing is not due for another month. For example, if you close on your new home January 20, 2020 your first mortgage payment would not be due until March 1, 2020.
You didn’t see your question in there? Then don’t hesitate to reach out to one of us or to Ben directly using the link below, we will gladly answer any questions you may have.
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