Your Questions About Mortgage Loan Process

Linda asks…

When is your mortgage loan officially approved?

We are in the process of buying a house, we have the house picked out and the mortgage company has given us the okay. He’s approved our credit scores and we sent all of our documents over to him (tax return, pay stubs, etc). When is it official that we’ve been approved? Is it officialy since our credit was approved, or do we have to get another go-ahead after they look over our income documents?

John answers:

First time buyers usually have to wait 30 to 45 days for full mortgage approval. Your mortgage is approved just prior to closing.

Read “Home Buying for Dummies” to learn about the process
OR ask your mortgage originator to explain the process
OR ask your buyers real estate agent to explain the process.

Nancy asks…

Can I get insight on our home loan/mortgage process?

We are first time homebuyers, so we’re learning as we go.

Our credit scores were upper 600s while going for an FHA loan, at the time that we got the preapproval.

We found a home and are now under contract.

Our loan officer called us yesterday to say that our credit scores just dropped. Mine, 2 small doc bills hit, ugh…I just had a baby and am guessing some bills slipped through.

My husband, recklessly, went $7 over his credit card limit.

With that being said, again, our scores dropped us low.

Our contract is still on the table, but we just have to get things rolling ASAP to get them fixed in order to try and get approved.

Our loan guy says that he needs these things done BEFORE he sends in into underwriting because we will end up having to pay them in the end anyway…better to find out now, before later.

We will be paying both of our credit cards down to under $50(on a $300 credit card) and $100(on a $500 credit card, today.

Our loan officer has a credit guy that says that he will get the doc bills(two small ones..one for $73, the other, I am unsure the amount) removed from my report in the next 5 to 10 days
.
Other than these things, all of our revolving accounts are paid on time and in good standing, no late payments in last 2 years.

I’ve been on my job for 7 years. He’s been on his for 2.
Our closing date was schedule for Feb 25 but, he’s now pushed it back 15 more days.

Our rental history is great.

Our debt to income is good to go.

My questions are:

Does this sound usual when it comes to getting a home loan? I feel confident but, am growing weary being that this is happening.

I guess that I am worried because TIME has been extended.

I just need any insight from anyone that may be experienced in these things.

Thanks so much.

John answers:

Do not fall for any credit repair scams.
Some of these loan people have “guys” on the side. How much are you paying for him to do this?
Did you know you can do the pay on delete yourself?
Did you know that items under $100 do not affect your score?
Are you sure they are not just making this stuff up?

Just making sure you are not getting scammed.
Not sure why someone else got involved in paying those medical bills. Not sure at all.
Shocked you do not know the amount.
You never got bills or looked at your own credit reports?
I honestly smell something bad…..

Ruth asks…

Mortgage Approval Process – Which step am I on?

So I went to the bank and applied for an FHA mortgage loan. All they did was open their public online bank site and filled out my information for a loan. That was a week and a half ago. They just sent me something that looks like an FHA consent form, I’m not sure, and a copy of my credit scores 800 average, that’s it. It doesn’t say anything about the progress.

I’m just wondering which step I’m on. Am I still applying or have they already did their check, approved, and just need to verify some information?
I also got a business card from the person that’s doing the paperwork, but I’m scared to call and ask :)

John answers:

You are in the beginning stage of the loan process. You have a card of the person that is in charge of doing your loan. This person is now your employee. This person should be willing to answer any questions about the stage your mortgage is in and what else is necessary for you to get an approval.

Call today, not tomorrow, ask for your loan consultant, he is listed on your business card sent to you.

In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, which you can find one in your local telephone book.

Make sure this mortgage broker or mortgage banker is able to do government loans such as FHA and VA loans if you qualify for one.

He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.

The amount of your monthly debt payments you are required to pay as per your credit report and the amount of mortgage you can take on based on your income will determine the amount of house you will be able to purchase.

When you speak with the mortgage broker you will need the following documents to complete the loan application, there will be others, but this will get you started.

#1 One month of pay stubs for each person that will be on the mortgage.

#2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.

#3 Two years of federal income tax along with the W-2 that match.

Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.

Once he gives you this pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.

Now make sure before you get your pre-approval you and your mortgage broker go over all your options as to the mortgage programs you qualify for, the interest rate, monthly payments.

If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.

You should select the loan that best suit your financial condition at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.

Make sure your mortgage broker explain all your options so you may make an intelligent decision.

What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.

So select the best option for you and your financial situation.

You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.

Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign.

Your mortgage broker will now order an appraisal to show proof of the property value.

The mortgage broker might ask for additional information or documentation, don’t get all up tight this is normal, just supply the information or find the documents needed.

After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.

Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.

I hope this has been of some use to you, good luck

“FIGHT ON”

Betty asks…

Second Mortgage, please help?

I am in the process of purchasing a home in Alabama. I live and work in TX. and this home will not be my primary residence until around July or August of this year. My question is, how will the mortgage company look at this loan, either as a second home or my primary residence. I do on planning on retiring in June and my husband already has prospects of another job, can we purchase the home based on our income now, or will we have to wait until we draw retirement and my husband’s new salary to determine our income? This whole process is confusing. Any help would greatly be appreciated

John answers:

The process is really simple:
– Consult phone directories and classified ads.
– Speak to your bank or search the internet to find reputable mortgage lenders.
– Second mortgages – credit unions should be taken into consideration with this option.
– Once you have a better idea of which mortgage lender you are going to deal with, make sure there are no hidden fees.
– Compare mortgage rates from several mortgage and second mortgage lenders to find the best deal.
– Once you have a low rate mortgage, it is time to close the deal.
– Make sure you verify all the above mentioned steps before signing the agreement.

Chris asks…

need a mortgage loan?

please help need a loan for a home purchase,,,credit score is 575, can anyone help

John answers:

The best help I can offer is to improve your credit score first. Honestly, it will save you LOTS of money if you do that first! Pull your own credit report from www.freecreditreport.com or go to www.myfico.com. These can be difficult to understand – Take this into your personal banking office, and speak with a banker. Find out what they recommend for you to improve your credit. If there is any outstanding debt on your report, take care of that, then ask them to report back to the credit reporting agencies. Follow up and make sure this is done. It can be a time consuming process, but well worth it in the long run. Then, work on building positive credit – get a store credit card, charge once, and pay it off immediately. Do the same with a major credit card – visa, mastercard, etc…, then get an auto loan – even if you can afford to pay outright for the car, and even with a lousy interest rate. Remember, everything you’re doing is an excercise in improving your credit history. If you follow the above steps, over time, your credit score will improve enough to get a mortgage at a reasonable rate. Good luck!

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