Ready to apply for a mortgage but you don’t know where to start? We can help! At Faber Homes, we have been working with Rochester-area lenders for decades so we know the process, and people, extremely well. If you’re ready to build with us and need a mortgage commitment, we are happy to help find you a lender that fits your needs. Otherwise, this blog will outline a few tips and tricks, as well as FAQs on the mortgage application process.
Tip #1:When shopping for a mortgage, it’s best to discuss all of your options with a couple lenders. So what should you ask them?
1. what type of mortgages do you offer?
2. how long will it take for my mortgage to get approved?
3. are there costs associated with getting a mortgage with your company?
4. where are your loans processed and underwritten?
Tip #2Getting pre-approved will save you some hassle when you apply for your mortgage. A mortgage pre-approval should be obtained before looking at homes, and is defined as a written commitment for a buyer from a lender. Pre-approvals are generally better than pre-qualifications, because they give buyers the peace of mind when submitting an offer or entering into a contract with a builder (like Faber!).
Tip #3If you’re a first time homebuyer, a great program to look into is the First Home Club Program. In essence, the program allows a buyer to receive up to $7,500 in grant money towards closing costs. As a first time homebuyer, you’d be required to save about $2,000 over a minimum of a 10 month period of time to earn the grant. When purchasing an existing home, however, sellers may view your offer differently from a buyer with a conventional mortgage and putting 20% down (mostly because they do not understand the program). At Faber Homes, we have a history of working with first time homebuyers taking advantage of the Club Program and can help you down this path should you choose to take advantage of it.
What type of documentation do I need to apply for a mortgage?
Types of documentation will vary from lender to lender (such as a drivers license, bank statements, purchase contracts, asset statements), but here is the main list of what you should have at the ready to apply for a mortgage:
Social Security card
One month’s paystubs
2 years of W2’s
What type of mortgage is best for me?
Unfortunately, this is not necessarily a cookie-cutter answer. There are many different types of mortgages and it is important to understand all facets of each before deciding on one over the other. Here are the three most popular:
Conventional: those with strong credit scores and more money for down payments often choose this avenue because of the ability to remove mortgage insurance for the entire life of the loan.
FHA: also known as Federal Housing Administration mortgages, are popular options for those with lower credit scores (620 and up) who do not have large down payment funds available. FHA mortgages allow buyers to purchase a home with a 3.5% down payment as well as receive up to 6% of a home’s purchase price (sellers concessions) to be used towards pre-paid items and closing costs.
VA: available only to United States Veterans, VA loans are popular due to the ability to finance 100% of the home’s purchase price.
What are mortgage points?
Paying for mortgage points is a practice that invovlves buying down interest rates to make monthly mortgage payments more affordable. In essence, one point will generally cost 1% of the total amount that is mortgaged, and will generally reduce the interest rate by .25% which can amount to significant savings over a 30 year period.
How long does it take to get a mortgage?
The timeline from mortgage application to approval can vary between lenders. Generally, a mortgage approval should take between 30 and 45 days. The best way to expedite the process is to stay close to your lender and return requested documentation back to the lender when it is required.
Did we hit all of your FAQs with this blog? Let us know in the comments.