Frequently Asked Questions
The best way for you to determine which program would best suit your family’s needs is to sit down with a trusted loan officer so they can explain all of your financing options. Things to consider are family size, how long you plan to stay in the home, current and projected income and debts, credit history and cash available for down payment and closing costs. We have almost all financing options and down payment assistance programs available to us, so we are uniquely positioned to help you!
A home is a place to live your life and can also be seen as an investment. When you rent, you write your monthly check, and that money is gone forever. When you own your home, you can deduct the cost of your mortgage loan interest, property taxes, and possibly even mortgage insurance, from your federal and state income taxes, this reduces your yearly tax obligation on your tax returns. Part of each payment you make each month also goes to reduce the balance of your loan, which increases your equity position, and is a form of forced savings. Another benefit is that the value of your home may go up over the years, which increases the amount of equity you have available to you. This equity becomes your money when you sell your home. Finally, you’ll enjoy having something that’s all yours – a home where your style will tell the world who you are.
sooner the better. Buying a home is a big financial decision and the sooner we start, the better plan we can have to help you achieve your financial goals sooner the better. Buying a home is a big financial decision and the sooner we start, the better plan we can have to help you achieve your financial goals. Two months will allow enough time to get fully pre-approved for a mortgage, find the perfect home, and time for inspections, final loan approval and closing of your new loan. If you have a home to sell, you should list your home for sale before starting your search.
Using a Realtor is an excellent idea. All the details involved in home buying can be mind-boggling. An excellent real estate professional can guide you through the entire process along with us to make the experience much more comfortable. A Realtor will be well-acquainted with all the important things you’ll want to know about a neighborhood. You may be considering the quality of schools, the number of children in the area, the safety of the neighborhood, traffic volume, and more. They will search the classified ads and multiple listing services for homes you’ll want to see. With immediate access to homes as soon as they’re put on the market, the Realtor can save you hours of wasted driving-around time. The best part is you don’t have to pay the Realtor anything! The payment comes from the home seller – not from the buyer.
Yes, this is an option that some buyers explore. However, it’s essential to understand that nothing is truly free, and this approach still carries a price. Unrepresented sellers (for-sale-by-owner properties) frequently lack adequate information about how to price their home or attempt to inflate the price instead of paying a real estate commission.
As an unrepresented buyer, it will be much harder for you to know if you’re overpaying. Real estate professionals have developed keen pricing insights that go well beyond only evaluating data through the Multiple Listing Service (MLS). And if you are overpaying, it will create further complications in securing financing. For these, and many other reasons, a large majority of consumer-to-consumer housing transactions never reach closing. Real estate professionals play a valuable role in keeping your home-purchase on track, starting with selecting and touring properties and continuing through negotiations, inspections, financing, and closing. This is especially true in today’s market, where alternative buying opportunities, including short sales, have added even more complexity to some real estate transactions.
Yes, your Realtor and lender will be able to advise you on any special requirements or time frames need to follow through on one of the above purchases. Sometimes these purchases may take a little longer to close, but the potential savings to the borrower can certainly make it worthwhile to the buyer.
It depends on the situation. A home can close in less than ten days if the buyers have met all of their lender’s requirements. Generally, you should allow between 3 to 6 weeks; maybe longer, depending on how soon the seller can vacate the house and how quickly you can close on the home. Another factor to consider on a closing time for a new home is if an individual seller owns the home, is a “Short Sale” or is owned by a Bank or Relocation Company. It is not uncommon for a Bank owned home to have a delayed contract acceptance and closing time.
There are many types of mortgages, and the more you know about them before you start, the better. Most people use a fixed-rate mortgage. With a fixed-rate mortgage, your interest rate stays the same for the term of the mortgage, which normally is 30 years. The advantage of a fixed-rate mortgage is that you always know exactly how much your mortgage payment will be, and you can plan for it.
Another kind of mortgage is an Adjustable Rate Mortgage (ARM). With this kind of mortgage, your interest rate and monthly payments usually start lower than a fixed-rate mortgage. But your rate and payment can change either up or down, as often as once or twice a year. The adjustment is tied to a financial index, such as the U.S. Treasury Securities index. The advantage of an ARM is that your payment may be lower because your initial interest rate will start at a lower rate. This may be an advantage if you are absolutely certain that you will be in the home for a short period of time.
There are several government mortgage programs, including the Veteran’s Administration’s (VA) programs and FHA loans. Most people have heard of FHA mortgages. FHA doesn’t actually make loans. Instead, it insures loans so that if buyers default for some reason, the lenders will get their money. This allows lenders to give mortgages to people who might not otherwise qualify for a loan. Part of our Certified Pre-Approval process is to sit with you one on one to discuss the different mortgage programs out there as well as how a different purchase price, property taxes, and other factors can influence your borrowing capacity.
Most loans have four components: principal & interest to cover the payment on the loan itself, homeowners insurance, which is a monthly amount to insure the property against loss from fire, smoke, theft, and other hazards required by most lenders, and the 4th part of a mortgage payment are the property taxes: the annual city/county taxes assessed on your property, divided by the number of mortgage payments you make in a year. Most loans are for 30 years, although 15-year loans are available, too. During the life of the loan, you’ll pay far more in interest than you will in principal – sometimes two or three times more. Because of the way loans are structured, in the first years, you’ll be paying mostly interest in your monthly payments. In the final years, you’ll be paying mostly principal.
The greater the down payment, the less the monthly mortgage payment will be, and the more immediate equity you will have in your home. In most cases, a down payment ranges between 3.5% and 20% or more. This amount will vary depending on the cash you have available and what payments are affordable for you. The closing costs will vary with the different loan programs and the amount of down payment. We will be able to provide this information to you upfront at the time of your pre-approval, so that there aren’t any surprises for you after you are under contract
Discount points allow you to lower your interest rate. They are essentially prepaid interest, with each point equaling 1% of the total loan amount. Generally, for each point paid on a 30-year mortgage, the interest rate is reduced by 1/4 (or.25) of a percentage point. When shopping for loans, ask lenders for an interest rate with 0 points and then see how much the rate decreases with each point paid. Discount points are smart if you plan to stay in a home for some time since they can lower the monthly loan payment. Points are tax-deductible when you purchase a home and you may be able to negotiate for the seller to pay for some of them.
Definitely! You need to know precisely what you are buying. It could be very disappointing to find out after you have purchased your new home that you are going to have to spend lots of money on unexpected repairs.
The cost of a professional home inspection could be the best money you ever spend on your house. Not only does the home inspector look for any defects from the roof to the foundation, but the inspector will often give you tips on maintaining and repairing your house. Home inspections are also recommended for newly constructed homes.
Established by your lender, an escrow account is a place to set aside a portion of your monthly mortgage payment to cover annual charges for home owner’s insurance, mortgage insurance (if applicable), and property taxes. Escrow accounts are a good idea because they assure money will always be available for these payments. If you use an escrow account to pay property tax or homeowner’s insurance, make sure you are not penalized for late payments since it is the lender’s responsibility to make those payments. In most instances, an escrow account is required on most loans.
PMI stands for Private Mortgage Insurance or Insurer. These are privately-owned companies that provide mortgage insurance for conventional loans over an 80% loan to value. They offer both standard monthly and special upfront programs for borrowers. These companies provide guidelines to lenders that detail the types of loans they will insure. Lenders use these guidelines to determine borrower eligibility. PMI’s usually have stricter qualifying ratios and larger down payment requirements than the FHA, but their premiums are often lower and they insure loans that exceed the FHA limit.
This is the most exciting part of the whole home buying process. You will have already “rehearsed” your closing with your lender so that you are assured everything is accounted for, and that there aren’t any last-minute surprises. The final HUD-1 (settlement statement) will have been reviewed, your lender should have previously given you the final dollar amount needed to close on your new home. At this time, you will be able to re-confirm that the dollar amount is the same as promised earlier. An appointment will be set at the Title Company for you to sign the final loan documents so that you can leave with the keys to your new home. Although this is probably the largest investment you will make in your life, you can go in feeling relaxed because you know that everything is delivered as promised to you up front.
By answering the questions in the online application section or phone consultation with a representative. Both can give you a ballpark idea of what price range you can afford. The next step is to get pre-approved so that the money you need is already committed to you; this gives you the strength of a cash buyer when you make an offer.
The first step is to get a Certified Pre-Approval for the purchase of your next home. We will be able to issue a certified pre-approval before you're looking for a home and guarantee the information and figures they will be giving you. Click here to learn more about the loan approval process.
Typically you will first pre-qualify for a mortgage, and then get approved after you have gone under contract on the home you wish to purchase.
Pre-qualification: A very informal determination by a lender or mortgage broker stating how much mortgage you might be able to afford. The lender may or may not have pulled your credit report, they may or may not have seen any income or asset documentation. A pre-qualification is an opinion and just that. It is not reassuring to have as your financing plan when you sign a contract to buy a home.
Pre-approval: This is usually a little more formal than a pre-qualification in that a lender may issue a pre-approval letter to you. Most lenders will call someone pre-approved when they have seen most of their needed documents for approval. They haven’t obtained an approval. They are making a more educated guess that the loan will be approved versus the pre-qualification. The letter will state that you are pre-approved up to a certain dollar amount, but it also has disclaimers that render it pretty much useless. The letter looks good, but it still doesn’t hold much validity.
Zenith Certified Pre-Approval: This is exactly what the title says. With Zenith Home Loans, your pre-approval is CERTIFIED, and we back it up with a written guarantee. To see a copy of our guarantee, click here.
There are numerous advantages and comfort in having a CERTIFIED Pre-Approval. When you sign the contract on your new home, you can do so knowing that you will not have to worry for the next few weeks to see if you are approved for the loan and whether or not you are actually moving in to your new home.
The other advantages of having a Zenith Certified Pre-Approved for a loan as early as possible in your home-buying process:
Sellers will find any offer you make more attractive versus another offer if you have a certified pre-approval for a mortgage.
The length of time before closing can be shorter if you’ve completed the steps to securing mortgage approval prior to signing a contract on a property. This may help entice the seller to accept your offer versus someone who is only pre-qualified.
If we were wrong in issuing your Certified pre-approval, we will reimburse you for certain items. No other lender will offer that, period.
Since you won’t have to worry about being approved or having to provide us with all your documents needed for approval,(since those were provided at the time we issued your Certified Pre-Approval), you will have more time available to focus on the other facets of buying a home such as any decorating or updating you may want to do after you move in.
Once we have discussed your personal buying profile, we will request certain documents specific to your situation so that we can review those documents to get us closer to issuing your Certified Pre-Approval. To see some of the documents that may be needed to secure your Certified Pre-Approval.
The programs outlined here are only a few of the loan program options we have to offer. Other options may obtain your desired results. We are also Certified Path 2 Buy coach’s and would be happy to assist you in getting prepared to buy your next home.