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First Time Home Buyer - FAQ

Below is a list of our most Frequently Asked Questions:

 

 

Q. How do I know whether to go to a bank or mortgage broker? What is the difference?

 

A. Banks typically have a few different types of mortgage programs which are governed by the internal guidelines and or guidelines necessary for them to sell their loans on the secondary market. Banks also offer savings and checking accounts, CDs, money market and other investment vehicles.

Mortgage brokers and mortgage bankers often have hundreds of different mortgage programs available to them. Because they have so many different sources for their mortgage financing, they can usually find a lender or investor with guidelines customized for your situation and your goals. Also, since your Sensible Mortgage Broker's only job is finding the best mortgage loan for you, they are very proficient at their jobs.

 

 

 

  

 

Q. How do I go about qualifying for a loan?

 

A. The first step is to set an appointment with your Sensible Mortgage Solutions Consultant. They are flexible and will meet with you at your home or  the office. They even have appointments on weekends and during evenings. When you sit down with your Sensible Mortgage Consultant, the first thing they will do is review your goals and priorities for this home purchase. Once they understand what your objectives are, they will then review your credit with you and take your application. Depending on the type of loan that makes the most sense for you and your family, they will need to review supporting documentation. Your Sensible Mortgage Consultant will then be able to provide a pre-approval letter for a loan in which you have qualified.

 

  

 

 

 

Q. What sort of documents will be required of me to get a loan?

 

A. Every loan is different, so the documentation required can also be different.  However, the typical documentation required for most loans is as follows:

  1. One month pay stubs for you and any co-borrower on your loan.
  2. Two years W-2s for each person on the loan.
  3. Two months of bank statements, and asset accounts such as a 401(k). These statements must include all pages.

Other documentation that may be requested could include: divorce decrees, child support orders and bankruptcy paperwork.

 

 

 

 

 

 

Q. Who will take care of my questions when the realtor has finished with the paperwork? Do they go through the whole process with me?

 

A. Your realtor will be with you from the time that you engage them through the close of your purchase. They'll be able to answer all of your real estate related questions. Typically, you will engage your Mortgage Consultant even before you start with your realtor. This is because you need to be pre-approved for your financing, to know how much you will be able to invest in your new home.

  

 

 

 

Q. Will the realtor, Mortgage Consultant, or bank contact my employer?

 

A. Your Mortgage Consultant's team or bank will most likely contact your employer. This will happen just before the close of your loan. It is critical that you do not change jobs during the process of buying your new home.  You should also keep your Sensible Mortgage Consultant apprised of any major life changes during this process. Your Sensible Mortgage Consultant is your advocate and their goal is to serve you the best way possible.  In order for them to do this, they need to understand what is happening in your financial life.

 

 

 

 

 

 

Q.  What determines the amount of down payment that I will need?

 

A. There are really three items that will determine the down payment that you should make on your home:

    1. The minimum down payment that is required for the loan that you have chosen and are approved for.

    2. The condition of the home which you are buying.  It may be more important to have money set aside to improve the home you're buying than to use the money as a down payment.

    3. What your personal and family goals and needs are. There may be items coming up in your near future making it important to have liquid assets available rather than using the money as a down payment.

 

 

 

 

 

 

Q. Why do I need PMI?

 

A. You may not need PMI. PMI also known as private mortgage insurance and is usually required by a bank, if the mortgage has less than 20% down payment. However, when working with your Sensible Mortgage Consultant, he or she will usually offer a loan program that fits your needs and does not require PMI. Though your Sensible Mortgage Consultant can get you a loan without PMI, it may be recommended. The reason is that in some cases a loan with PMI will be more affprdable. Other programs offer loans without PMI more affordably.  It all depends on your personal financial situation.

 

 

 

 

Q. Why do I need to pay for another insurance policy for the title, when a lawyer has already certified it is good?

 

A. Every state's laws are different but usually the title attorney or abstractor must research the ownership and title of your home for the previous 30 years.  There have been cases in the past, and can be again in the future, where liens which are much older than 30 years can come back to haunt the new owner of the property. That is why every lender protects their investment in your home by requiring you to pay for a lender's title insurance policy. *Please note that this policy only protects the lender up to the amount of the loan. This lender's title policy will not protect you or the equity that you may have in this new home beyond what is owed to the lender. To protect yourself, you may want to speak with the closing attorney or settlement agent on your loan and ask about owner's title insurance. This will come at an additional cost, but will protect you and your assets as long as you own this home.

 

 

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