Mortgage FAQs
What is the S.A.F.E. Act?
In July of 2009, the U.S. Congress passed the Secure and Fair Enforcement for mortgage licensing. The laws require states to enact laws that require anyone engaged in lending to be licensed. Anyone who originates mortgage loans must be registered with the National Mortgage Licensing System and Registry. This act limits the amount of dialog a salesman of John Foster Homes can have with a prospective buyer as it pertains to their new loan. Based on a customers banking relationship, John Foster Homes will assist as best we can in placing the customer with the right lender.
When should I start looking for a mortgage?
Qualifying a buyer based on income and current debt can be performed by any mortgage officer. Most lenders today will issue a pre-qualification letter to a buyer.
Is a pre-qualification letter a loan approval?
No, the pre-qualification letter gives a buyer an amount that their income qualifies them for and is based solely on the information given by the buyer. No verifications are done in a pre-qualification.
When will I get a loan approval?
Once a buyer has a contract to buy a home and has paid for a credit report and appraisal fee ($500) will the actual underwriting process begin. The contract spells out the proposed home with all improvements for appraising the proposed construction. During the two weeks of the appraisal the lender is asking the buyer for income verification from employers, verification of income from check stubs, tax returns or employers. Other conditions may be required based on each customers credit experience. Once the appraisal and all verifications and conditions are meet, the loan is submitted to underwriting. It is important to understand the loan will not be submitted until the whole package is submitted.
What do I need at loan application?
- Contract to purchase
- Approximately $500 to pay for credit report and appraisal
- W-2's or tax returns (2 years)
- Current pay stubs (2 months)
- Bank statements (2 months)
- List of assets
What is PITI? Principal, Interest, Taxes and Insurance.
Your monthly payment will consist of all these items. Your Truth-in-lending statement issued after your loan application is submitted will disclose your proposed payment based on your loan amount, term of the loan and interest rate. Many buyers overlook that property taxes and homeowner's insurance for the next year must be part of the payment. Expect taxes and insurance to run between $115 to $125 per month. Depending on your total down payment your lender may require private mortgage insurance. PMI is determined by percentage down and your lender has these rates. If you put 20% down PMI is waived, but taxes and insurance will still be a part of your payment.| Example: | Principal + interest payment | $500 |
| Escrow taxes and insurance | $125 | |
| Private mortgage insurance | $75 | |
| Total monthly payment in this example: | $700 |
