Most Common Mortgage Questions
0:00:00.9 Speaker 1: Hello. I wanted to do a video about the most common mortgage questions. So I Googled “What are the most common mortgage questions?” So the first one, how do you qualify for a loan? Well, the broad answer is that you go and get pre-approved through a local experienced mortgage lender that you’ve vetted and you have trust for, and go through the pre-approval process, and that’s how you qualify. And there are sub-topics of that that get into down payment requirements, credit score requirements, income, debt ratios. Those things will be answered in some of the other questions that we get into later, but the broad answer is get pre-approved.
0:00:44.4 S1: Can you get a mortgage without a credit score? Not really. Most loans are underwritten through something called AU, which stands for Automated Underwriting. Very few lenders… I’ve never worked for a lender that does manual underwriting. I haven’t seen anyone do manual underwriting in a long time. I think this might be a few lenders out there that will do manual underwriting, but most lenders are gonna use AU, and for AU, you need credit scores. Really the industry has gone to so much automation, and to help determine an underwriting answer, you really need a credit score. So if you don’t have a credit score, you really should look into opening some credit cards, some store cards, a gas station card.
0:01:35.2 S1: You can try submitting some things to your credit bureaus, like history of alternative credit, like your rental payment history, your car insurance payment history, utility account bills payment history. But the best way that’s really gonna get you the credit score the quickest, and probably the most solid credit score, is actual credit from creditors, credit card companies and the like. So go out and get a credit score, I think is the answer.
0:02:03.1 S1: What’s the difference between being pre-qualified and pre-approved? Big. Pre-qualified is really more of a loan officer opinion. People come to me and I can do some quick number crunching, maybe I pull up a credit report and I say, “Hey, based on what you’ve told me verbally, I think you’re pre-qualified up to X. I can even issue a pre-qualification letter.” Not really worth much, because I haven’t really gone through and done all the long math and documented things and made it really formal, which is what the marketplace demands. Sellers and realtors want to know that you’re pre-approved, meaning you’ve submitted paperwork, the loan’s been processed, the loan’s been underwritten. Maybe they’ve asked you for some subsequent paperwork.
0:02:51.1 S1: You finally get what’s called a conditional loan approval. The industry knows it as a pre-approval. Your loan’s been underwritten. It can’t be a final approval because you haven’t found a house yet, so there’s still no appraisal, there’s no title work, there’s things missing, hence the word pre-approval. So really, the answer is get pre-approved, and the industry just really won’t accept pre-qualifications, and I think as a consumer, you should want to get pre-approved and know with certainty where you stand, as far as your ability to qualify for… I should say get approved for a mortgage.
0:03:27.8 S1: Next question, how much home can you afford? Kinda loops back on what I’m talking about so far. Get pre-approved. I wish I had a blanket answer, and I wish I could say something like, “Oh, you know, you can usually qualify for five times your income for a mortgage,” but there’s so many variables, it’s really hard to say anything that’s gonna be even approximately accurate. It depends on your debt load, it depends on your credit score, your down payment. What type of property are you looking to buy? Is there an HOA fee, which you would see with a condo or a town house? Really hard to give a broad answer. How much home can you afford? Get pre-approved and find out.
0:04:11.8 S1: How much should you save for a down payment? The theme for this video should just be, “There’s no easy answers.” How much should you save for a down payment? It depends. What type of property are you buying? Where are you buying? How much are you spending? If you are eligible for a conforming loan amount, you might be able to get away with as little as 3% down, three and a half percent down, or 5% down, depending on if you do a conventional or an FHA loan. Are you in a high-cost area and might you have eligibility to a conforming high balance loan? Or are you spending enough money that your loan amount in the county and area that you’re in is considered a jumbo loan? Which might require 20% down payment minimum.
0:05:00.0 S1: And then on top of your downpayment, we have to remember there are closing costs, which can be at least 2% to 3% or more of the purchase price, so… How much should you save for a down payment? I think that question should be, how much should you save to buy a house? And the answer is, really depends, talk to a lender, get pre-approved and they’ll really take you through the details. 3% down on certain first-time home buyer conventional programs are possible. 5% down would probably get you a little better terms on the rate and the mortgage insurance on a conventional. On an FHA loan, you can do 3.5% down. I don’t really love FHA loans because the mortgage insurance is really expensive, and on a 3.5% down FHA loan, you can’t get rid of the mortgage insurance, where you can on a convention loan. A lot of different things tie into this question and the other questions, as you can see, talk to an experienced lender, get pre-approved.
0:06:00.1 S1: Let’s see if the last question yields anything different here. How do you know which home mortgage option is right for you? Sorry, same answer. Talk to a lender. There’s too many variables really to give a quick answer. What type of property are you buying? What’s going to be that best loan option for you? What’s the minimum down payment? Should you do more down payment if you have more available cash? Should you just do the minimum down payment and stay invested? There’s something to be said for staying invested and earning dividends and interest in compounding your cash and only doing the minimum down payment. There’s so many different things that talking to an experienced lender to help counsel you on some of this, and then maybe even talking to a financial advisor is the best way to go.
0:06:46.0 S1: So I wanna show you quickly my website. If you wanna get pre-approved, go to getloans.com, click on the Get Pre-approved button, and there’s no fee, there’s no obligation. It’s just a way for me to capture data. You upload documents, and we can go through the process. If you wanna talk to me first, click Talk Now. We can schedule a call, and it’ll take you through some questions and ask you about scheduling a call, which you click here and it walks you through everything. And then there’s other ways to connect with me. You click the Connect button, and you can schedule a call there, email, meet my team… You can connect with me on Facebook and YouTube and LinkedIn and all kinds of ways. You can get a rate quote. Click on the Rates button, and it’ll take you through some questions and ask you, “What is it that you’re trying to do?” Let’s say that you wanna buy a home, so you click on Buy. “Are you under contract? Are you just looking?” And it just takes you through all the different questions and ask you what I need to know to get you a rate quote.
0:07:43.3 S1: So there it is, the most commonly Googled mortgage questions. I hope my video answers were somewhat helpful. Feel free to check in. Connect with me. Let me know if you have questions outside of anything that I answered here or if you’d like to go through the pre-approval process. Thanks very much for watching.