Whether your apply Online or in person with your loan officer, the typical mortgage application goes something like this:
Make an appointment with your loan officer to apply for a mortgage. It is important to meet with your Loan Officer, in person or on the phone, even if you intend to apply online.
During the application your loan officer with ask you questions about:
Your loan officer will collect standard items such as:
Once you are ready, your application is processed, documented and sent to the Underwriter, who (hopefully) approves your application. Keep in mind this process could take up to 30 days.
An important part of a successful application is to stay in communication with your Loan Officer. This is especially important if you are making any changes to your financial picture. Your loan officer is there to guide you through the “do’s and don’ts” of the process so maintaining an open line of communication, will keep any unforeseen hurdles to a minimum. Whether you are buying a new home or refinancing for a lower monthly payment, work closely with your Real-estate team and they will get you to the finish line!
Key Things to Know About Homeowners Insurance
Homeowners insurance protects your home and personal property if disaster strikes, and protects you against liability for accident in and around the home that injure others or damage their property. Policies can also cover living expense and medical payments.
Your mortgage lender will tell you the minimum coverage to carry. This is typically at least the amount of the mortgage.
This is the amount you agree to pay out of pocket for each claim against your home or personal property coverage. Higher deductibles mean lower premiums.
Replacement Cost vs. Actual Cash Value (ACV)
You can insure your home and possessions for the amount it would take to replace, rebuild, or repair with similar materials, at current costs. Or you can insure for ACV, which is the amount it would take to repair or replace property after deducting for depreciation. It is obviously lower than replacement cost.
Insurers may offer discounts for alarm systems, deadbolt locks, or covering your vehicle too.
Find out what different insurers charge.
Read Your Policy
Make sure you understand what is covered and what is excluded. Losses from fire, windstorm, and theft are typically covered, though hurricane damage may be excluded. Flood coverage usually requires a separate policy.
Review Policy Yearly
Check in with your agent every year to make sure your coverage is adequate. Home additions, and improvements add value and increase replacement costs.
Please contact us if you have any questions about this or your home financing.
Mortgage insurance (MI) pays the lender if you default on your mortgage. Also called private mortgage insurance (PMI), it is generally required by the lender if your down payment is less than 20% for conventional financing. You the borrower pay the premiums, which are typically included in your monthly mortgage payment unless you finance them into your loan amount or pay for them upfront when you close on the loan. Fees for PMI vary depending on the size of the down payment and your credit score. The fees are lower the higher your credit score and the closer your down payment is to 20%. For conventional loans, you no longer need to pay for mortgage insurance once you’ve paid down your principal so that you owe only 78% of the value of your home if you occupy the home as your primary residence.
The Federal Housing Administration (FHA) is a government agency that requires mortgage insurance. This insurance is tied to their FHA insured loans, which have lower down payment and credit score requirements. With FHA mortgage insurance, you have an upfront insurance that is typically financed into the loan amount and an annual premium that is required to be paid monthly, in your monthly mortgage payment. The monthly mortgage insurance for FHA loans varies depending on when your loan originated. Current regulations retain monthly insurance for the life of the loan, regardless of your loan to value. Most borrowers that have seen an appreciation in their home value will refinance to a conventional loan when their equity in their home reaches 80% of the value.
PMI premiums may be tax deductible some years, depending upon how Congress votes on the matter. Always consult a tax professional before making any decision with tax implications.
If you have any questions about this or any part of the home buying or refinancing experience, please contact us today.
On closing day, expect to sign a lot of documents and walk away with a big stack of papers. Here’s a list of the most important documents you should file away for future reference: