Worried about your home purchasing options? Having trouble determining your affordability range? Need to know more on how to qualify for a loan? Absolute Home Mortgage Corporation has answers to all your queries in this FAQs section.
Q: How can I determine my Affordability Range?
When it comes to the loan amount and purchase price falling within your affordability range, there are several factors involved. Lenders assess your income, assets and debts when determining whether or not you qualify for a loan. This includes how much money you have for closing fees, down payments, other funds to close your loan and for points.
There are several loan programs in the open market that offer different rates and terms. Some of them require minimal down payments, while others offer greater flexibility in terms of income and credit. The best thing you can do is to get pre-approved so that you can learn more on your affordability range, the loan programs you can qualify for, the price range within your budget and the amount of monthly payments you will need to make.
At Absolute Home Mortgage Corporation, we offer pre-approval services without any cost. If unsure, you can even use our industry leading calculators to determine your monthly payments, the purchase price and the loan amount that are within your affordability range.
Q: How much money do I need to purchase a home?
Under any traditional conventional financing, you will have to bear a down payment, ranging from 10% to 20% of the purchase price of your home. However, there are several other loan programs available (such as the FHA loans) that require a minimum down payment of 3.5%.
Aside from down payment, there are several other costs associated with buying a new home. Examples include the closing fees, prorated items such as homeowner’s insurance and property taxes and any pre-paid interest. Contact our licensed loan officers today to get a better idea of what to expect when purchasing a new home.
Q: How does Pre-approval differ from Pre-Qualification?
Pre-qualification involves an informal and brief overview of our assets, income and credit. It can easily be done over the phone. After all the necessary and particulars are gathered, the lender will issue an initial estimate of the purchase price and the loan amount for which you qualify.
The purpose of pre-qualification is to give potential and first-time buyers an idea of their affordability range. However, the process is neither as accurate nor as comprehensive as a pre-approval. The latter is an intense process and formal evaluation of all your income, credit and assets that are documented and can be easily verified.
Pre-approval is a conditional approval that holds more value and substance with both the seller and their real estate agent(s), especially if you’re competing for another offer than a pre-qualification. To learn more about both terminologies, please feel free to give us a call.
Q: Is a Home Inspection necessary?
Although home inspections are not required, it is nonetheless a good idea to hire a professional and qualified inspector to inspect the home you’re planning to buy, analyze its conditions and recommend whether you should buy it or not.
Professional inspectors look for and report on any mechanical issues and structural problems that may exist in the home and that can lead to a number of problems for you and your family in the near future. In addition, the inspector also checks toilets, faucets, appliances and all other items in the home to make sure that everything is in working conditions. If there is something that needs a fix, you should point it out to the seller before closing the deal.
Q: What are the documents required when I need to purchase a loan?
Some of the standard documents required at the time of a purchase transaction include all information relating to your income. This includes the paystubs that cover W-2s relating to the last two years and those covering the most recent 30 days. Other documents include:
✔ Asset information (banks and mutual fund statements) covering the last 60 days
✔ Any other information showing the source of funds for the down payments
✔ Closing fees, pre-paid items and points information
✔ Details of any other funds that are needed to close your loan
Q: How long does the purchase process take?
A typical purchase process takes 30-60 days. Your purchase contract sets the time required to close the purchase process, which is agreed upon by both the seller and the buyer. The same time also dictates the closing date for the loan.
Q: What takes place on the date of loan closing?
On the date of loan closing, you will have to sign your loan documents at any designated place (such as your office or your attorney’s office). On the same date, and in the presence of a signing authority, you will have to carefully review and sign the agreement and prepare a certified or a cashier’s check to pay off any remaining down payment, closing fees and any other amount required to close the funds.
In some cases, you will be required to wire your funds directly to the title company. Our loan processors will guide you throughout the entire closing process and advise you on the best possible course of action. As soon as the loan-related documents are signed, you become the proud owner of your new home.
To learn more about the purchase process and loan closing dates, please feel free to contact us!