Mortgage Process



Find Out How Much You Can Afford

The first step in obtaining a mortgage is to determine the type and amount of loan for which you qualify. In the case of buying a home, it is extremely beneficial to determine how much home you can afford even before you begin looking. In doing so, you will be able to have an accurate price point when you are searching, and will also be able to begin to form an accurate budget for homeownership. By answering a few simple questions, we will calculate your buying power, based on standard lender guidelines.

Click here to Pre-Qualify.

You should also consider getting pre-approved for a mortgage, which requires verification of your income, credit, assets and liabilities. A pre-approval is better than a prequalification because the lender is issuing an approval that states you have already secured a mortgage. It is recommended that you get pre-approved before you start looking for your new house in order to:

  1. Look for properties within your range.
  2. Be in a better position when negotiating with the seller (the seller knows your loan is already approved).
  3. Close your loan faster.

More on Pre-Qualification

LTV and Debt-to-Income Ratios

LTV or Loan-To-Value ratio is the numerical value of your loan amount versus the appraised value, which is used to express the exposure that a lender is accepting with respect to your equity position in financing your home. Lenders are usually prepared to lend a higher percentage of the value, even up to 100%, to creditworthy borrowers. Another consideration in approving the loan for a particular borrower is the ratio of monthly debt payments (such as auto and personal loans) to income. Rule of thumb states that your monthly mortgage payments should not exceed 1/3 of your gross monthly income. Therefore, borrowers with high debt-to-income ratio may need to pay a higher down payment in order to qualify with a lower LTV ratio.

FICO Credit Score

FICO Credit Scores are widely used by almost all types of lenders in their credit decision. It is a quantified measure of creditworthiness of an individual, which is derived from mathematical models developed by Fair Isaac and Company in San Rafael, California. FICO scores reflect credit risk of the individual in comparison with that of general population. It is based on a number of factors including past payment history, total amount of borrowing, length of credit history, search for new credit, and type of credit established. When you begin shopping for new credit, your credit report may be adversely affected depending on how many times and when it is pulled. It is, therefore, advisable that you authorize the lender to run your credit report only after you have chosen to apply for a loan through them.

Self Employed Borrowers & No Income Verification Loans

Self-employed individuals often find that there are greater hurdles to borrowing versus a wage earning person. For many conventional lenders the problem with lending to the self-employed is documenting an applicant's income. Applicants with wage earning jobs can provide lenders with pay stubs, and lenders can verify the information through their employer. In the absence of such verifiable employment records, lenders rely on income tax returns, which are typically required for 2 years. An alternative for a self-employed borrower who cannot demonstrate two years of sufficient income from their tax returns would be a limited documentation or reduced documentation loan if such loans meet state and federal guidelines.

Source of Down Payment

Lenders expect borrowers to demonstrate sufficient monetary assets for the down payment and other fees payable by the borrower at the time of funding the loan. It is generally expected that these funds be the borrower's own savings, although a borrower may receive non-returnable gifts towards down payment and other loan fees subject to specific guidelines.