Whether you are purchasing your first house or the empty nester house, the buying process seems to always be changing and nerve racking. Over the past several years, there has been a lot of legislation for mortgage companies and professionals to navigate through and some of those changes have a direct impact on the buyer. The Scott Miller team is considered an expert at these changes and can easily manage the mortgage requirements along with the customers needs to make this a smooth process and eliminate or significantly reduce the stress associated with obtaining a mortgage. Call them now at 763-567-7218.
What is the difference between pre-approved and pre-qualified?
Pre-qualification is the “old” way of buying a home. This is basically a discussion with the lender and you go through your income, debts, and credit to determine how much you can afford to spend each month for your mortgage payment. Usually there is not a verification of the information discussed, as a result, the sellers and the listing agent are hesitant to accept an offer based on a pre-qualified buyer. A Pre-approved buyer involves the same discussion, however, the income, assets, credit are all checked and verified. There are only two items left for the loan to be complete. (the appraisal, and the title work has to be completed) Once The Scott Miller team has reviewed your income, credit report and asset statement, they are able to write a letter stating you are pre-qualified for that home purchase. This tells the listing agent and the seller that you are going to purchase a home and you have prepared all the necessary information to obtain a home loan and just need the home! The listing agent and the sellers can feel comfortable knowing that you will secure financing assuming the appraisal and title work meet standards as your financing is no longer a guess. Call The Scott Miller team to get pre-approved now 763-567-7218.
How much do I need for a down payment?
This is the reason most people wait to buy a home as they believe they need a large down payment. That is not true. Depending on the type of loan, your down payment could be very small even 0! All loan programs allow the seller to pay a percentage of your closing costs. The Scott Miller team can provide a breakdown of that percentage based on the loan program that is best for you. FHA loans will require the down payment to be 3.5%. VA loans along with USDA Rural Development do not require a down payment. Conventional loans can do 5% (3% when using an MHFA loan program) MHFA loan programs ONLY require that the buyer has $1000 of THEIR own money into the transaction. So as you can see, there are several loans with little or no money down. Deciding which loan program is best for you does not have to be a difficult task. The Scott Miller team will work within your budget needs and your monthly comfort level for a house payment and explain the loan programs that meet your needs so you can make a healthy financial decision. call The Scott Miller Team at 763-567-7218.
Can I receive monetary gift funds from a relative to help with down payment?
This is a question that comes up with most of our first time home buyers. Every loan program will allow funds from a family member called a gift. There is specific documentation guidelines so make sure to discuss this with the Scott Miller team BEFORE you transfer any money. Minnesota Housing loans do require that the buyer has at least $1000 of their own money into the transaction. This is a strict rule and we need to make sure it is easily documented. All other monies and loans can use gift funds as long as the documents are followed correctly. Call the Scott Miller Team to discuss the proper way to use gift funds at 763-567-7218.
How does my credit score affect my borrowing power?
With all the regulation that has been put in place over the last several years, credit scores play a large part in the correct loan program. Different loan programs have different credit score minimums so starting the pre-approval process with the Scott Miller team is very important to make sure the loan program is right for you. The Scott Miller team is able to look at your current credit score and if needed, make suggestions that could have an immediate impact on your credit. (called rapid rescore) this process can take as little as 10 business days. Even if you have experienced a big credit event like a bankruptcy or foreclosure, you will be able to buy a home (there are timelines and guidelines to follow) but just because you had this happen, does NOT mean you cannot buy a home. The best way to determine if your credit meets the guidelines is to call the Scott Miller team at 763-567-7218 and see exactly where you are at from a mortgage perspective.
Should I pay discount points?
The quick and simple answer is no. Discount points are used to decrease the interest rate. At the Scott Miller team we take a financial approach to guiding you to the best mortgage. Paying discount points increases the cost to obtain the mortgage. Our approach is what is the best use of that money. Is it better to pay the interest rate down which will lower your payment. This is a mathematical equation. Simply take the cost of the discount points, divide by the monthly savings and see how long it takes to recoup the discount points. For example if you spend $1500 on points and it saves you $23 per month in your house payment. 1500 / 23 = 65.22 months before you have saved the $1500 or just under 5.5 years. Another way to look at this, is what else can you spend the $1500 on. Are you able to reduce or eliminate a debt? is it better for you to start a college savings fund, etc. Call the Scott Miller team to discuss interest rates and discount points at 763-567-7218.
Can I sign my documents electronically?
Most of the application documents and the purchase agreement documents can be signed electronically. There are some documents that third parties still require a “wet” signature. this can usually be a faxed copy of that form signed, then faxed back. But most of the documents can be signed electronically to start. The closing documents still require a live signature. Since mortgage loans are bought and sold on the secondary market, there are a lot of changes that have to happen before electronic signatures are accepted for closing.
Is it okay to buy new furniture or appliances before my loan closes?
This is probably my most favorite question as the answer is not easy. One of the many changes in the mortgage industry is one where the mortgage company will receive a notice if your credit is checked during the process of your loan. This is done to make sure that the buyer does not increase their debt and possibly change the approvability of that mortgage. Depending on your situation for income to debt percentages, it may be best to wait to make any purchase until the loan is closed. if you are paying cash for an item and you have enough cash verified to close it may be an easier decision. The best answer is to call the Scott Miller team to discuss your financial picture to make sure a purchase before closing does not change the closing of your new home, call us at 763-567-7218!