How are the three terms, pre-qualification, pre-approval & final loan approval differs from each other?
The first process called pre-qualification involves the assessment of the total mortgage you can offer to the lender and this is determined by the income-proof provided by you and your credit report. The verification of your employment and accounts information is conducted in the next process called pre-approval. In this very process your mortgage capacity is approved after estimating the market value of the property you are interested in.
The last process, known as the final loan approval, marks the completion of the loan approval with all necessary documents and other formalities including contingency plan been finalized by the lender.
How many types of first-time buyer programs are there?
You can confirm about the different buyer programs available to you through your agent. But always remember that buyer programs are mostly there at the level of your local community, state or province, rather than at the level of the nation. This is because the buyer programs are frequently created and operated upon at the local level.
How could I know that which one is the best of the number of different mortgage plans?
To choose the best mortgage plan for yourself you’ll have to do some research. This research should include from a local bank having a mortgage program to the brokers that have a wide range of lenders to offer. Other than that you should also visit some sources online, like LendingTree, where you will get information about the lenders from across the U.S. You can also have three lenders on offer from a single loan request form that are vying to give you the loan.
Is the IRA retirement fund is accepted as the down payment for a house?
If it’s your first time to buy a house then you are most welcome to utilize your IRA retirement funds. Moreover, The IRS stipulates that husband & wife can separately utilize up to $10,000 as the qualified acquisition costs that is also penalty-free, provided each of them is buying the house for the first time. The qualified acquisition costs is nothing but the costs of having a house built, rebuilt or bought, including other financial transactions, like closing and settlement costs.
First time homebuyer: A person having no claim on the main home at least for 2 years, after the end of which he or she owns the main home (his or her spouse) to which these conditions applies, is considered as the first-time buyer.
Am I liable to pay points?
When you compare the different mortgages, you must take into notice the number of points, that is your up-front interest, together with your rate of interest.
Are there any options for the individuals having bad credit record?
Yes, there are! Many lenders are particularly concerned with this kind of clients only. Many of the buyers missed the opportunity of having a better deal stroked because of their sheer apathy towards their credit report. It is not always that your credit report is as worse as you think it is.
You can get a fair deal once you sit down and re-evaluate your credit report and correct the errors if any along with handling your account better. Here you are provided with a scheme of free credit report together with free Credit Check Monitoring Service for 30 consecutive days. If you are also facing the problem of a poor credit report, but want a great deal on your mortgage then you can rely on the service of the LendingTree.
What the terms front ratio & back ratio indicates to, as I frequently encounter them when looking for a mortgage program?
Before you are awarded a loan it is determined that of what scale a house you can afford and it is assessed through your present income. This process involves these two terms, front & back ratio.
Front Ratio: It is the ratio of all the mortgage payments (PITI) that includes your taxes, principal amount, insurance, and condominium to your GROSS income. It should be under 28% mark, but is not compulsory. For an instance, if your income is $37000/month and your total mortgage payment is $973, and then your front ratio will end up being 26%.
Back Ratio: It is the ratio of the sum of your total mortgage payment, credit card payments, car payments or any other kind of loan payments to your GROSS income. Its limit is up to 36%. For an instance, if your income is $37000/ month, your mortgage payment is $973, two credit card payment is $59 and & $43, car payment is $212 that adds up to $1287, and then your back ratio would be 35%.
What should a buyer do in case he doesn’t have any money for the down payment and for the closing costs?
There are a few mortgage programs that allow the individuals having low or no money to buy a home. But still, you are supposed to deposit funds for the down payment or the closing cost or in some cases both. This is because the lenders expect you to be actively participating in the program, as a substantial amount of your income would go into the mortgage payment.
In some circumstances it has been seen that the seller itself bears some of the closing costs (normally ranges between 3%-5%) or the cost of down payment is lowered (up to 5%). But it is very hard to find a case of no down payment at all. Although, having a good credit report and money for the closing costs, enables an individual to benefit in some ways in the area of conventional loan.