How long does it take to close on a loan?
If you’ve been pre-approved for a loan, it can take an estimated 30 days to close your loan. The major underwriting has been completed and as long as you provide the documentation needed to clear up any conditions, the process can go smoothly. That said, every situation is different. There are a lot of variables at play, but we’re always honest with you from the start about your estimated timeline.
What’s a loan estimate?
A loan estimate is a disclosure we send to every borrower who applies for a loan. You’ll receive it within three business days of applying and it shows the loan’s total costs, monthly payment, and terms. You can use the estimate to compare your loan options and decide which one is right for you.
What’s home equity?
Home equity is the difference between your home’s value and your outstanding loan amount (e.g., if you buy a home for $150,000, put down $50,000 and borrow $100,000, you have $50,000 in equity). As you pay your mortgage down, each monthly payment includes principal to help you build equity in your home.
Why do you also need homeowner’s insurance?
Homeowner’s insurance is required, no matter how much you borrow. This insurance protects your interest in the home as well as ours. If your home is damaged due to fire or another natural disaster, insurance would help with the costs to repair/rebuild the home.
What’s mortgage insurance?
If we lend you money, but you have a risk loan profile, mortgage insurance may be required. Typically, if you put down less than 20% on a conventional loan, you may cancel the insurance at 80% under certain conditions.
If you take out an FHA or USDA loan, you pay mortgage insurance for the life of the loan. The insurance protects us if you default on the loan. The FHA and USDA guarantee the loan amount by charging insurance premiums to cover the costs.
What documents are necessary to apply for a mortgage?
Every borrower has different circumstances, but overall, you’ll need the following documents to apply for a mortgage with us.
- Paystubs covering the last month (4 paystubs for weekly pay; 2 paystubs for bi-weekly pay, and 1 paystub for monthly pay)
- W-2s for the last 2 years from all jobs
- If you’re self-employed, tax returns for the last 2 years (with all schedules)
- Bank statements from the last 2 months
- Proof of employment
- If you’re using them to qualify, investment statements from the last 2 months
What is the minimum down payment required?
Every loan program is different when it comes to down payments. Some don’t require a down payment, such as VA and USDA loans. FHA loans require 3.5% down, and conventional loans require at least 3% down for first-time homebuyers and 5% down for subsequent homebuyers. If you have the money, you can always make a larger down payment than the minimum. Ask us how it’ll affect your payment to see if it’s worth it to invest more money into your home.
What are discount points?
Discount points are a percentage of your loan amount, but they’re optional points you request to pay to buy your rate down. For example, if we quote you a 4% rate, but you want to buy it down, you might pay 1 point to bring it down to 3.875% or 3.75% depending on the state of the market.
What are origination points?
Origination points are a percentage of your loan amount and cover the cost to process and underwrite your loan. One point is equal to one percent of your loan. Not everyone pays origination points; it depends on your qualifying factors and the type of loan.
What does it mean to lock in an interest rate?
After we approve your loan and you’ve secured a property for purchase, you can lock in a currently available interest rate. Our loan officers watch for the best rates to help you meet your financial goals. Once you lock in a rate, it doesn’t matter what happens to rates on the market. You have the locked-in rate as long as you close before the rate lock expires, which is usually 30 to 45 days.