Should I prequalify before I start looking for a
Answer: Yes. It is easier to buy a
home if you have been prequalified, and you don't have to worry
about whether you will get the loan or not when you find your
dream home. To prequalify, make an appointment with your
lender, and take all your paperwork with you, such as bank
statements, W-2 forms, and paycheck stubs. The mortgage lender
will review your credit report and examine your documents. At
this time, you can also decide which financing option best
suits your needs. Afterwards, most lenders will write you a
prequalification letter which you can show to your real estate
broker and the seller so they know that you are a serious
buyer. The lender may charge a small fee for this service, but
it is well worth it. YES Financial does not charge a fee
for this service.
How do I plan for a mortgage?
Answer: Be prepared with at least
2 years of financial information. If your lender asks for
additional information, get it to him as soon as you can. Have
all the paperwork ready in one place. Keep in mind that most
loans take 2-4 weeks to process and complete; government loans
(such as, FHA and VA) take 4-6 weeks. Always close a little
earlier in the month rather than at the end of the month, which
is a very busy time for attorneys. Make sure you work with a
reputable mortgage company, and get references. And remember,
do not go with the cheapest rate quote; you'll end up paying in
time or poor service.
I am self-employed. What documentation do I need to get
Answer: You will
need to show the following: Two years personal income tax
returns, two years business income tax returns (if you are
incorporated), a current balance sheet, a current profit and
loss statement and a personal credit report. Some lenders may
ask for a list of documents. Just be patient and show
I've just changed my job. Will this affect my loan
Answer: There is no hard and fast rule to this, but do
remember that sometimes a change in employment may not work to
your benefit. Make sure that you show your job change as an
improvement in your financial life. This is what the lender
wants to see. In most cases, it is best to wait 2-3 months
after getting a new job before you begin applying for a
Can I get a mortgage loan without credit?
Answer: It is possible; but you do
have to prove your credit-worthiness. Some "proofs" of good
credit are: The fact you currently rent, credit letters from
utility companies, short-term notes, rental agencies (such as
furniture or appliance), and even car references. Any company
or person who gave you credit in the past can be used.
Can I qualify for a mortgage even though I had problems in the
Yes, you can qualify - because bad credit in the past meant
that you fixed whatever it was that became a financial problem
for you. This shows strength and commitment to a lender.
Remember, bad credit in the past does not mean the same thing
as a bad credit risk.
My spouse has a poor credit history will it affect
Answer: Yes, it will. So if you
can manage it, try to arrange a mortgage under your own name.
Make sure that your spouse is happy with this arrangement, as
he or she will have to sign documents at the time of closing.
Also, do consult with your attorney or title company to make
sure you have complied with all state laws, since some mortgage
loans require various pieces of information on your spouse.
I had a bankruptcy a couple of years ago. Will
personal bankruptcy affect my ability to buy a
Answer: Bankruptcy itself will
not keep you from being approved for a mortgage. You can
certainly buy a home sooner than you might expect after
bankruptcy, because the lender may look at your credit history
before the bankruptcy, the cause of bankruptcy, and how you
have handled your financial life after bankruptcy. Each
situation must evaluated on an individual basis. The
rules are constantly evolving.
What do I do if my mortgage loan application is
Answer: It is very rare that a
mortgage loan application is rejected outright. Rather, you are
often told that a loan is "not possible at this time." The last
three words of this phrase are crucial. You can actually work
at getting approved. Meet with the lender who rejected you and
ask for the reason of the rejection. Then work at removing this
reason. Perhaps in a month's time, you can apply again and be
approved. Simply ask the lender bluntly: "Will I be approved if
I do this and that?" Chances are, he'll say yes.
What is the "truth-in-lending statement?"
Answer: If you're hunting for a
mortgage, no doubt you've heard this phrase come up frequently.
This statement gives you the entire list of costs that you will
have to pay (loan origination fee, discount fees, and prepaid
interest), along with the actual figures of the carrying the
loan. These figures are entered into a computer to figure out
the annual percentage rate (APR). The end result is a statement
that shows you the true cost amortized (see Glossary) over the
term of the mortgage.
Question: Should I
pay off my bills before buying a home?
Answer: No, do
not deplete your cash reserves, because you need to show these
reserves to the lender so he knows that you can save and manage
your money. A depleted bank account does not inspire confidence
in a lender. Proceed paying your bills in a normal way, and get
a prequalification letter. That way you won't have to worry
about paying off the bills.
Question: Is a large
Answer: This really is a matter of
personal choice, and your own "comfort zone". A large
down-payment does not automatically qualify you for a mortgage,
since approval often depends on what the lender thinks you can
comfortably pay back. Speak with your lender and ask him for
estimates with both a small or large down-payment.
Question: Am I
eligible for VA financing?
Answer: First of all, send for your Certificate of
Eligibility from the Department of Veterans Affairs (VA). When
you were discharged, you were given a document called a DD-214.
Send a copy of this form along with your request for
eligibility. You should receive an answer in 1-2 weeks. You
need to have a minimum of 90-days of active duty.
Question: I am a
first-time home buyer. What is the best loan for
Answer: Most first-time home buyers make a home
purchase with a Federal Housing Administration (FHA) mortgage,
which is especially designed for the first-time buyer, and
comes with 3% down-payment. Most lenders and real estate
brokers are familiar with this mortgage, and you should simply
ask. But, again, get yourself prequalified, so you'll know how
much of a home you can purchase.
Question: I am a
recent college graduate. Can I purchase a home?
Answer: Yes. Many lenders are interested in lending to
recent graduates, if they have good credit. Often, your college
courses are seen as your "experience". However, the Veteran
loan wants you to actually be on you new job for 6 months
before you can qualify to buy a home.