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What can you expect when you apply for a mortgage? |
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What supporting documentation will I be required to provide? |
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After I've submitted my application, can I make changes? |
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Can I obtain pre-approval before finding a property? |
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Do I need to sell my existing home before I apply for a new mortgage loan? |
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Is there an application fee or any upfront costs? |
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Should I pay discount points in exchange for a lower interest rate? |
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Who is my contact person? |
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How frequently am I updated regarding the status of my loan? |
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How do I receive my loan documents? |
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How do I calculate my Loan-to-Value ratio (LTV)? |
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How do I calculate the value of my property? |
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How do I know if it makes sense to refinance? |
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Can I set up a direct debit to make my monthly payment? |
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How do I know if it's best to lock in my interest rate or to let it float? |
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What is a credit score and how will Shearsons Mortgage use credit scoring to evaluate my application? |
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I'm self-employed. How will you verify my income? |
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Will Shearsons Mortgage consider my overtime, commission or bonus income when evaluating my application? |
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I am retired and my income is from pension or social security. What will I need to provide? |
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If I have income that's not reported on my tax return, can it be considered? |
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How will Shearsons Mortgage verify the rental income I have? |
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I have income from dividends and/or interest. What will I need to provide? |
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Do I have to provide information about my child support, alimony or separate maintenance income? |
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Will my second job income be considered? |
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I am relocating because I have accepted a new job that I haven't started yet. How should I complete the application? |
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I've had a few employers in the last few years. Will that affect my ability to get a new mortgage? |
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I was in school before obtaining my current job. How do I complete the application? |
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If my property's appraised value is more than the purchase price can I use the difference towards my down payment? |
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I'm getting a gift from someone else. Is this an acceptable source of my down payment? |
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I am selling my current home to purchase this home. What type of documentation will be required? |
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What will be required if I withdraw money from a 401K account for my down payment? |
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Can I really borrow funds to use towards my down payment? |
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I've co-signed a loan for another person. Should I include that debt here? |
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I have student loans that aren't in repayment yet. Should I show them as installment debts? |
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How will a past bankruptcy or foreclosure affect my ability to obtain a new mortgage? |
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What is an installment debt? |
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What if I can't supply the standard documentation necessary to get a loan? |
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What can you expect when you apply for a mortgage? |
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First, you'll complete our on-line application.
The application will ask you questions about the home and your
finances and takes less than 20 minutes to complete. As soon
as you've finished the application we'll review your request
for instant approval. If your application is approved on-line,
we'll ask you for a deposit to cover the cost of the appraisal
and the final credit report so that we can begin to process
your request immediately. This deposit will be credited towards
your closing fees at closing.
Within three business hours of completing your application,
a loan advisor will contact you to introduce themselves and to
answer any questions you may have. Your loan advisor is a mortgage
expert and will provide help and guidance along the way. If your
request wasn't approved on-line, they'll ask you for any information
required to make a decision about your loan.
If you are purchasing a new home, the loan advisor will also contact
the Real Estate Broker or the seller so that they'll know whom to
contact with questions.
We'll order the appraisal and the title.
We'll order the appraisal from a licensed appraiser who is familiar
with home values in your area. Depending on your finances and the loan
amount requested, different types of appraisals are used. Sometimes
they can do their evaluation from the street and won't have to make
an appointment with you to view the inside of your home.
Title insurance will be necessary, if you're purchasing a home we'll
work with the real estate broker or seller to insure the title
work is ordered as soon as possible. If you are refinancing we'll
take care of ordering the title work for you. We'll use the title
insurance policy to confirm the legal status of your property and
to prepare the closing documents.
Your loan processor will keep you informed every step of the way
via e-mail.
We'll contact you to coordinate your closing date.
After we receive all the necessary documents, including the appraisal
and title work, we'll contact you to schedule your loan closing. If
you are purchasing a home, we'll also schedule the closing with the
real estate broker and the seller.
The closing will take place at the office of a title company or
attorney in your area who will act as our agent. A few days before
closing your loan advisor will contact you to walk through the final
information so that there won't be any surprises at closing.
That's all there is to it! You're on your way to the most convenient
home loan ever!
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What supporting documentation will I be required to provide? |
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You will generally be asked to support your income with a
recent pay stub and the prior year's W-2 Form.
Self-employed individuals must support their income with the prior
two years' tax returns.
Funds needed to close the transaction are supported with a copy of a
recent bank statement or other liquid financial instruments.
If proceeds from the sale of another property are being used for the
down payment, an estimated closing statement on that transaction will
be required to support the necessary funds to close.
Some transactions may require additional documentation.
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After I've submitted my application, can I make changes? |
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Yes.
Loan Advisor can help you with any changes.
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Can I obtain pre-approval before finding a property? |
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Yes.
It's always a good idea to know the amount of financing you
qualify for before you begin shopping for a home.
Additionally, having a lender pre-approval in hand will strengthen
your offer in the eyes of the seller. Our pre-approval will help
you determine the monthly payment you can afford and the amount
of cash required to close the transaction.
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Do I need to sell my existing home before I apply for a new mortgage loan? |
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Absolutely not!
You can apply for a new mortgage loan before you sell your
current home.
However, depending on your income and debt levels, you may need to
sell your current home before you can close on your new home.
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Is there an application fee or any upfront costs? |
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No! There is no upfront costs. No costs and No obligation. Shearson does not require an up-front fee to submit an application and begin the loan process.
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Should I pay discount points in exchange for a lower interest rate? |
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Discount points are considered a form of interest. Each discount
points is equal to one percent of the loan amount. You pay them,
up front, at your loan closing in exchange for a lower interest
rate over the life of your loan. This means more money will be
required at closing, however, you will have lower monthly payments
over the term of your loan.
To determine whether it makes sense for you to pay discount points,
you should compare the cost of the discount points to the monthly
payments savings created by the lower interest rate. Divide the
total cost of the discount points by the savings in each monthly
payment. This calculation provides the number of payments you'll
make before you actually begin to save money by paying discount
points.
If the number of months it will take to recoup the discount points
is longer than you plan on having this mortgage, you should
consider the loan program option that doesn't require discount
points to be paid.
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Who is my contact person? |
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Upon receipt of your loan application, a loan advisor is
immediately assigned to your loan. Within two hours the
loan advisor will call or e-mail you and be your primary
contact until your loan is officially opened. After your
loan is officially opened, your loan advisor will assign a
loan processor to your loan and be your primary contact until
your loan is closed.
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How frequently am I updated regarding the status of my loan? |
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Your loan processor will contact you at least once a week with an update on your loan.
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How do I receive my loan documents? |
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After you complete your application with a loan advisor, Shearsons Mortgage will provide a package to you via email or mail.
This package will contain your loan application and disclosure documents.
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How do I calculate my Loan-to-Value ratio (LTV)? |
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The Loan-to-Value ratio (or LTV) is one of the most important
factors in your loan process. It is used to determine the limits
within which your Housing and Debt ratios must fall for you to be
approved. It can also determine which fees you will be charged for
your loan, and the amount of these fees. It will also determine
whether you must pay Private Mortgage Insurance (PMI) and use an
Impound/Escrow Account.
Loan-to-Value ratio (LTV) is simply the amount you are borrowing
divided by the value of the subject property you are purchasing or
refinancing. This gives you a simple ratio. The value of your
property is its appraised value OR the amount you pay for the
property whichever is lower. In the initial stages of qualification
and approval, your property's value is understood to be an estimate.
It will be confirmed, if necessary for your particular loan, by a
professional appraiser hired by Shearsons Mortgage.
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How do I calculate the value of my property? |
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Since a mortgage is a loan secured by a piece of real property,
a crucial factor is in the correct value of the property in
question. Property value can be determined in a number of ways:
- The Market Value of the property - that is, what a buyer
will pay for it, and what other comparable properties in the
neighborhood have recently sold for.
- The Appraised Value of the property - that is, what a
trained and licensed professional deems the property to be
worth based on an inspection, comps, and a thorough analysis
of the property and its neighborhood.
Additionally, the appraiser estimates the replacement value of
the property, that is, the cost to build a house of similar size
and construction in a vacant lot. The appraiser reduces this cost
by an age factor to take into account deterioration and depreciation.
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How do I know if it makes sense to refinance? |
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The simple rule of thumb for determining if it makes sense to
refinance is to analyze the amount that it will cost you to refinance
compared to the monthly savings you'll have by reducing your payment.
By dividing the cost of refinancing by the monthly savings you can
determine how many monthly payments you'll have to make before you've
recaptured the initial refinance cost. If you plan on staying in your
home longer than the recapture time it may make sense for you to
refinance.
If you are looking to obtain cash for some of the equity in your home,
but the interest rate on your current first mortgage is near or lower
than current mortgage rates, you may want to consider a home equity
loan. With a home equity loan you can obtain the cash you need without
paying off your existing first mortgage. If you don't need cash right
now or want to have easy access to funds in the future, a home equity
line of credit may be just what you are looking for!
To fully analyze whether it's the time to refinance or to obtain a
home equity loan you'll have to look deeper. The remaining term of
your current loan must also be considered, as well as your tax bracket.
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Can I set up a direct debit to make my monthly payment? |
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Most of our services allow you to set up a direct debit to make your monthly
payment. Upon receiving notification regarding the servicer for your loan,
contact the toll-free number provided to set up your direct debit.
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How do I know if it's best to lock in my interest rate or to let it float? |
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Mortgage interest rate movements are as hard to predict as the
stock market and no one can really know for certain whether
they'll go up or down.
If you have a hunch that rates are on an upward trend then you'll
want to consider locking the rate as soon as you are able. Before
you decide to lock, make sure that your loan can close within the
lock in period. It won't do any good to lock your rate if you can't
close during the rate lock period. If you're purchasing a home,
review your contract for the estimated closing date to help you
choose the right rate lock period. If you are refinancing, in most
cases, your loan could close within 30 days. However, if you have
any secondary financing on the home that won't be paid off,
allow some extra time since we'll need to contact that lender to
get their permission.
If you think rates might drop while your loan is being processed,
take a risk and let your rate "float" instead of locking. You can
watch rates and lock in at any time, but at least 5 days prior to
your closing.
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What is a credit score and how will Shearsons Mortgage use credit scoring to evaluate my application? |
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A credit score is one of the pieces of information Shearsons Mortgage will use to evaluate your application. Banks and other financial institutions
have been using credit scores to evaluate credit card and auto applications for many years, but only recently have mortgage lenders begun to use credit
scoring to assist with their loan decisions.
Credit scores are based on information collected by credit bureaus and information reported each month by your creditors about the balances you owe
and the timing of your payments.
A credit score is a compilation of all this information converted into a number that helps a lender to determine the likelihood that you will
repay the loan on schedule.
The credit score is calculated by the credit bureau, not by the lender.
Credit scores are calculated by comparing your credit history with millions of other consumers. They have proven to be a very effective way
of determining credit worthiness.
Some of the things that affect your credit score include your payment history, your outstanding obligations, the length of time you have had
outstanding credit, the types of credit you use and the number of inquiries that have been made about your credit history in the recent past.
Credit scores used for mortgage loan decisions range from approximately 300 to 900. Generally, the higher your credit score, the lower the risk
that your payments won't be paid as agreed.
Using credit scores to evaluate your credit history allows us to quickly and objectively evaluate your credit history when reviewing your
loan application. However, there are many other factors when making a loan decision and Shearsons Mortgage never evaluates an application
without looking at the total financial picture of a customer.
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I'm self-employed. How will you verify my income? |
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Generally, the income of self-employed borrowers is verified by
obtaining copies of personal (and business, if applicable)
federal tax returns for the most recent two-year period.
However, based on your entire financial situation, we may
not need full copies of your tax returns.
We'll review and average the net income from self-employment
that's reported on your tax returns to determine the income that
can be used to qualify. We won't be able to consider any income
that hasn't been reported as such on your tax returns. Typically,
we'll need at least one, and sometimes a full two-year history of
self-employment to verify that your self-employment income is stable.
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Will Shearsons Mortgage consider my overtime, commission or bonus income when evaluating my application? |
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In order for bonus, overtime, or commission income to be considered,
you must have a history of receiving it and it must be likely to
continue. We'll usually need to obtain copies of W-2 statements
for the previous two years and a recent pay stub to verify this
type of income. If a major part of your income is commission earnings,
we may need to obtain copies of recent tax returns to verify the
amount of business related expenses, if any. We'll average the amounts
you have received over the past two years to calculate the amount that
can be considered as a regular part of your income.
If you haven't been receiving bonus, overtime, or commission income
for at least one year, it probably can't be given full value when
your loan is reviewed for approval.
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I am retired and my income is from pension or social security. What will I need to provide? |
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Shearsons Mortgage will ask for copies of your recent pension
check stubs, or bank statement if your pension or retirement
income is deposited directly in your bank account. Sometimes
it will also be necessary to verify that this income will
continue for at least 3 years since some pension or retirement
plans do not provide income for life. This can usually be verified
with a copy of your award letter. If you don't have an award letter,
we can contact the source of this income directly for
verification.
If you're receiving tax-free income, such as social security earnings
in some cases, we'll consider the fact that taxes will not be deducted
from this income when reviewing your request.
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If I have income that's not reported on my tax return, can it be considered? |
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Generally, only income that is reported on your tax return can be
considered when applying for a mortgage. Unless, of course, the
income is legally tax-free and isn't required to be reported.
Some lenders may offer a stated income program, which means that
you can be qualified for a loan based on the income you state rather
than that which can be verified. Usually these programs require
larger down payments and offer interest rates that are substantially
higher than regular mortgage rates. Shearsons Mortgage doesn't offer
stated income programs at this time.
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How will Shearsons Mortgage verify the rental income I have? |
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If you own rental properties, we'll generally ask for the most
recent year's federal tax return to verify your rental income.
We'll review the Schedule E of the tax return to verify your rental
income, after all expenses except depreciation. Since depreciation
is only a paper loss, it won't be counted against your rental
income.
If you haven't owned the rental property for a complete tax year,
we'll ask for a copy of any leases you've executed and we'll estimate
the expenses of ownership.
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I have income from dividends and/or interest. What will I need to provide? |
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Generally, two years personal tax returns are required to verify
the amount of your dividend and/or interest income so that an
average of the amounts you receive can be calculated. In addition,
we'll need to verify your ownership of the assets that generate
the income using copies of bank statements, brokerage statements,
stock certificates or Promissory Notes.
Typically, income from dividends and/or interest must be expected
to continue for at least three years to be considered for repayment
of your mortgage loan.
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Do I have to provide information about my child support, alimony or separate maintenance income? |
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Information about child support, alimony, or separate maintenance
income does not need to be provided unless you wish to have it
considered for repaying this loan.
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Will my second job income be considered? |
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Typically, income from a second job will be considered if a
one-year history of secondary employment can be verified.
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I am relocating because I have accepted a new job that I haven't started yet. How should I complete the application? |
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Congratulations on your new job!
If you will be working for the same employer, complete the
application as such but enter the income you anticipate you'll
be receiving at your new location.
If you're employment is with a new employer, complete the
application as if this were your current employer and indicate
that you have been there for one month. The information about
the employment you'll be leaving should be entered as a previous
employer. We'll sort out the details after you submit your loan
for approval.
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I've had a few employers in the last few years. Will that affect my ability to get a new mortgage? |
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Having changed employers frequently is typically not a detriment
to obtaining a new mortgage loan. This is particularly true if you
made employment changes without having periods of time in between
without employment. We'll also look at your income advancements as
you have changed employment.
If you're paid on a commission basis, a recent job change may be an
issue since we'll have a difficult time of predicting your earnings
without a history with your new employer.
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I was in school before obtaining my current job. How do I complete the application? |
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If you were in school before your current job, enter the name of
the school you attended and the length of time you were in school in
the "length of employment" fields. You can enter a position of
"student" and income of "0".
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If my property's appraised value is more than the purchase price can I use the difference towards my down payment? |
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Unfortunately, if you are purchasing a home, we'll have to use the
lower of the appraised value or the sales price to determine your
down payment requirement.
It's still a great benefit for your financial situation if you are
able to purchase a home for less than the appraised value, but
our investors don't allow us to use this "instant equity" when
making our loan decision.
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I'm getting a gift from someone else. Is this an acceptable source of my down payment? |
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Gifts are an acceptable source of down payment, if the gift giver
is related to you or your co-borrower. We'll ask you for the name,
address, and phone number of the gift giver, as well as the donor's
relationship to you.
If your loan request is for more than 80% of the purchase price,
we'll need to verify that you have at least 5% of the property's
value in your own assets.
Prior to closing, we'll verify that the gift funds have been
transferred to you by obtaining a copy of your bank receipt or deposit
slip to verify that you have deposited the gift funds into your account.
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I am selling my current home to purchase this home. What type of documentation will be required? |
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If you're selling your current home to purchase your new
home, we'll ask you to provide a copy of the settlement
or closing statement you'll receive at the closing to verify
that your current mortgage has been paid in full and that
you'll have sufficient funds for our closing.
Often the closing of your current home is scheduled for
the same day as the closing of your new home.
If that's the case, we'll just ask you to bring your settlement
statement with you to your new mortgage closing.
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What will be required if I withdraw money from a 401K account for my down payment? |
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If you'll be withdrawing funds from a 401K or retirement account
to fund your down payment, we'll probably ask you to provide
evidence that you have the funds available by providing a recent
statement.
We may also need to verify whether or not repayment is required.
If repayment is required, it's not a problem.
We'll just consider that monthly payment when making your loan decision.
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Can I really borrow funds to use towards my down payment? |
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Yes.
you can borrow funds to use as your down payment!
However, any loans that you take out must be secured by an asset
that you own. If you own something of value that you could borrow
funds against such as a car or another home, it's a perfectly
acceptable source of funds.
If you are planning on obtaining a loan, make sure to include
the details of this loan in the Expenses section of the application.
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I've co-signed a loan for another person. Should I include that debt here? |
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Generally, a co-signed debt is considered when determining
your qualifications for a mortgage. If the co-signed debt
doesn't affect your ability to obtain a new mortgage we'll
leave it at that.
However, if it does make a difference, we can ignore the monthly
payment of the co-signed debt if you can provide verification
that the other person responsible for the debt has made the
required payments by obtaining copies of their cancelled checks
for the last six months.
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I have student loans that aren't in repayment yet. Should I show them as installment debts? |
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Any student loan that will go into repayment within the next 6
months, should be included in the application.
If you are not sure exactly what the monthly payment will be at
this time, enter an estimated amount.
If other student loans are reflected on your final credit report,
which will not go into repayment in the next six months, we may
need to ask you for verification that repayment will not be required
during this time period.
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How will a past bankruptcy or foreclosure affect my ability to obtain a new mortgage? |
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If you've had a bankruptcy or foreclosure in the past,
it may affect your ability to get a new mortgage. Unless
the bankruptcy or foreclosure was caused by situations beyond
your control, we will generally require that 2 to 4 years have
passed since the bankruptcy or foreclosure.
It is also important that you've re-established an acceptable
credit history with new loans or credit cards.
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What is an installment debt? |
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An installment debt is a loan that you make payments on,
such as an auto loan, a student loan or a debt consolidation loan.
Do not include payments on other living expenses, such as insurance
costs or medical bill payments. We'll include any installment debts
that have more than 10 months remaining, when determining your
qualifications for this mortgage.
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What if I can't supply the standard documentation necessary to get a loan? |
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We offer special loan programs that include low documentation
or even no documentation. You can indicate how much documentation
you'll be able to provide in your online application, or you can
call your personal loan consultant for more details.
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