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Frequently Asked Questions (FAQ)
General Questions:
A mortgage broker is a licensed professional who helps borrowers shop and secure mortgage loans by comparing various loan products from multiple lenders to find the most favorable rates and terms.
Mortgage brokers work with multiple lenders to offer a variety of loan options, while mortgage bankers work for a single lender and offer that institution’s loan products. Brokers provide more choices.
Using a mortgage broker can save you time and effort by allowing us to shop around for mortgage rates and terms on your behalf. We have access to a wide range of loan products and can offer personalized advice based on your financial situation.
We are typically paid through commissions by the lender. There are no upfront costs for using a mortgage broker. We get paid upon the successful closing of your loan. It will not cost you more than going directly to the lender (the lender either pays us commission or pays their in-house loan officer commission, it makes no difference who they pay); however, by coming to us, we are able to find you a loan with better terms and lower interest rates, which can save you money over the life of the loan. Our loyalty is to our customer, not to any institutions.
While being self-employed adds some extra steps to the loan process, with the right preparation and documentation, we have helped many self-employed borrowers successfully secure mortgages.
Typically, lenders require at least two years of personal and business tax returns. This helps them see the history of your income and assess its stability.
We also have NonQM programs such as bank statement loans that we can use 12 months or 24 months of personal or business bank statements to qualify you for a loan.
Yes, you can get a loan if you are not a U.S. citizen, but the process and requirements may vary depending on your residency status. The rule of thumb is if you can legally reside in the States and have a valid work visa, then we can get you a loan. We also have programs for people with ITIN but not social security number, and foreign nationals. Contact us for more details!
The Mortgage Process:
The timeline can vary, but the typical process takes between 30 to 45 days from application to closing. Here, at Plenti Mortgage, we can close loans as fast as 14 days.
A pre-approval means a lender has looked at your financial information – like your income, credit score, and debts – and determined how much money they’re willing to lend you for a home. Think of it as a financial greenlight that shows you’re serious and financially prepared to buy a house.
It’s important because it:
⦁ Shows Sellers You’re Serious: When you make an offer on a house, sellers want to know you can actually afford it. A preapproval letter shows them you’ve already talked to a lender and you’re a serious buyer.
⦁ Helps You Know Your Budget: It’s easy to fall in love with a house that’s out of your price range. Getting preapproved tells you exactly how much you can borrow, so you can focus on homes you can afford.
⦁ Addresses Potential Issues in Advance – For example, we can have time or plan to fix or improve your credit score, like paying down debits or correcting errors on credit reports. A better credit score can get you a lower interest rate, saving you thousands over the life of the loan. By addressing issues early, we can avoid last-minute problems that could delay or derail your home purchase.
⦁ Speeds Up the Process: Having a preapproval can speed up the mortgage process because a lot of the groundwork is already done. This can be a big advantage in a competitive housing market where other buyers might be making offers on the same house.
⦁ Gives You Confidence: Knowing you’re preapproved can give you confidence and peace of mind as you shop for your new home. You’ll know you have a lender ready to support you when you find the perfect place.
You’d need to fill out an application form and here’s a list of typical documents you’ll need to provide:
- Proof of Income:
- Pay Stubs: Recent pay stubs, usually for the last 60 days.
- Tax Returns: Personal and possibly business tax returns for the past two years.
- W-2 Forms: W-2 forms from your employers for the past two years.
- Proof of Assets:
- Bank/ Retirement Account Statements: Statements for the past two to three months for all your accounts that you’ll use for down payment and closing costs, including checking, savings, investment accounts, 401(k), IRA, or other statements.
- Credit Information:
- Credit Report – consent to pull your credit report.
- Proof of Identity
- Driver’s License or Valid Visa/ID: A valid photo ID if you are a US Citizen, if not, then a valid Visa/ID to verify your citizenship status and identity in the US.
- Property Info
- Property Details: Info about the property you’re planning to buy.
Your credit score plays a significant role in your mortgage application process. A higher credit score typically qualifies you for a lower interest rate, which can save you thousands of dollars over the life of the loan. A higher credit score can also help you qualify for lower down payment options and gives you access to a wider variety of loan products. Also, if you need private mortgage insurance (PMI), which is required for down payments of less than 20%, you’ll generally pay a lower premium with a higher credit score. A lower credit score can present challenges, but we thrive on creating solutions for our customers, contact us today!
Yes, we can work with borrowers with less-than-perfect credit. We have access to a variety of lenders, some of which specialize in loans for people with challenged credit.
It depends on several factors, including the type of loan, your financial situation, and the lender’s requirements. Some government-backed loans can be as low as 0% or 3.5%, but generally, lenders are looking for 5% to 20%.
A monthly mortgage payment (escrowed) typically includes several components, often summarized by the acronym PITIA: Principal, Interest, Taxes, Insurance, and HOA fee if applicable.
Private mortgage insurance (PMI) is a type of insurance that lenders require from homebuyers who make less than 20% downpayment. It protects the lender in case hte borrower defaults on the loan.
Loan Options and Rates :
We can help you secure various types of loans, including conventional loans, FHA loans, VA loans, USDA loans, jumbo loans, and more. We have loan products to meet the needs of both residential and commercial borrowers. Please visit Loan Programs on our site for more information.
Several factors affect your mortgage interest rate. Here’s a breakdown of the key factors:
- Credit Score: higher credit scores generally qualify you for lower interest rates because they indicate to lenders that you are a lower risk borrower.
- Loan amount: the size of the loan can influence the interest rate. Smaller loans may have higher rates due to the lender’s fixed costs, while larger loans (jumbo loans) often have higher rates because they exceed conforming limits
- Down Payment: a larger down payment reduces the lender’s risk, which can result in a lower interest rate
- Loan Term: shorter terms (e.g. 15 years) usually have lower interest rates compared to longer terms (e.g. 30 years) because they are less risky for lenders
- Loan Type: FHA, VA, and USDA loans may offer lower rates for qualifying borrowers, but they come with specific requirements and fees.
- Economic Conditions: overall economic conditions, including inflation, the Federal Reserve’s interest rates, and the bond market, influence mortgage rates. Interest rates can fluctuate daily.
- Points: you can pay upfront to lower your interest rate (buying points).
We have access to multiple lenders and can compare rates and terms to find the most competitive offer. We can also advise you on improving your credit score and other factors that can help secure a lower interest rate.
Closing and After Closing :
The amount of closing costs varies depending on several factors, including the location of the property, the type of loan, and the specifics of the real estate transaction. Typically, they range from 2% to 5% of the purchase price of the home. Here’s the breakdown of the common components of closing costs:
⦁ Loan Origination Fee: a fee charged by the lender for underwriting the loan
⦁ Appraisal Fee: The cost of having the home professionally appraised
⦁ Credit Report Fee: The cost of pulling your credit report
⦁ Processing Fee: a fee charged for processing the loan
⦁ Title Search and Title Insurance: These fees ensure that the title is clear of any liens or issues and that you are protected in case of any title disputes
⦁ Escrow Fees: Fees paid to escrow company or closing agent for managing the closing process.
⦁ Attorney Fees: In some states, an attorney must be involved in the closing process.
⦁ Recording Fees: Fees charged by the local government to record the property transaction
⦁ Prepaid Costs: These include prepaid interest, property taxes, homeowner’s insurance, and sometimes mortgage insurance. These can vary significantly based on when you close on your loan.
Once your mortgage closes, our involvement typically ends, but you can still reach out to us for advice or assistance if needed. Your lender will handle the servicing of your loan, including payment processing and account management. Or your lender may sell your loan to servicers to handle your payment and account, in which case, you’d receive a letter from the new servicer.
Refinancing your mortgage can be a great way to save money, but it’s important to choose the right time and ensure you meet certain criteria:
- Timing: most lenders require that you wait at least 6 months after purchasing your home or your last refinance before you can refinance again.
- Interest rate drop: a good rule of thumb is to refinance if you can reduce your interest rate by at least 0.5% to 1% to make the cost of refinancing worth it while providing significant savings over the life of the loan.
- Improved credit score
- Home Equity increase: If your home has appreciated in value and you now have more than 20% equity, you can refinance to remove the PMI; or you can refinance to take cash-out
- Loan term: you can refinance to shorten or extend the term of your loan to pay off your loan faster or to lower your monthly payments